Fact: Despite huge growth in places like China and India, the U.S. stock market is still the world's largest.
But here's another fact: More than half of the world's stock value is outside of the ol' U.S. of A. That's thousands and thousands of companies, many of which are in places most of us don't often think about. But it's a safe bet that among those places and companies are some of the greatest investment opportunities of the next decade.
There's a lot of money to be made out there. Does your portfolio reflect that reality?
It's a great big world out there
Most of us have some global exposure in our portfolios, even if only indirectly, via American-based companies with a big global presence. Own Coca-Cola
But it's one thing to hold a global giant, even a non-U.S. one like Finnish cell phone giant Nokia
For instance, ever heard of Banco Latinoamericano de Comercio Exterior
Or how about Mumbai-based automaker Tata Motors
These two companies are regional heavyweights in markets poised for big growth. How can we find other opportunities like these? And more to the point for many investors, how can we take advantage of these opportunities in our retirement portfolios?
An important addition to your long-term portfolio
Getting more international exposure into your 401(k) or IRA isn't as simple as buying a single fund or ETF that covers the whole world outside of the U.S. For one thing, it's a big world out there! Different parts of the world are going to generate very different investment results. A more thoughtful approach is in order.
For instance, while Europe as a region has been fairly stagnant over the last year, the group of countries commonly called "emerging markets" -- China, India, Russia, Brazil, and so forth -- has posted some impressive numbers. One easy way to buy some of that growth is via the Vanguard Emerging Markets ETF
Diversification remains key
Is that a concern? It might be: As in other parts of your portfolio, diversification enhances your chances of long-term success. In an article in the latest issue of the Fool's Rule Your Retirement newsletter, advisor Robert Brokamp pointed out that lots of "international" funds are heavily tilted toward large-cap names, yet much of the growth in these markets comes from smaller-cap stocks.
Finding those kinds of smaller-cap stocks can be a challenge for many investors, and this is one of those asset classes where buying a fund makes sense for many. Robert did some research and identified several high-quality international funds with a smaller-cap focus, any of which would be a good way to add exposure to your retirement portfolio.
If you're thinking along those lines and would like a short-cut on the research, I encourage you to check out Robert's article. Rule Your Retirement is a paid service, but you can get full access right now with a no-obligation 30-day free trial. Just click here to get started.
Fool contributor John Rosevear owns shares of Vanguard Emerging Markets ETF. Coca-Cola, Nokia, and Wal-Mart are Motley Fool Inside Value recommendations. Bladex is a Motley Fool Global Gains choice. Coca-Cola is a Motley Fool Income Investor recommendation. The Fool owns shares of Bladex, Coca-Cola, Wal-Mart, China Mobile, and Vanguard Emerging Markets Stock ETF. You can try any (or all!) of our Foolish newsletter services free for 30 days, with absolutely no obligation.
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