Many investors have bemoaned the poor performance of the stock market since the end of the tech bubble in 2000. But with the right type of stocks in your portfolio, you wouldn't be complaining about the so-called lost decade -- you'd be celebrating it, along with some very strong returns.

Later in this article, I'll reveal where you should have invested to find market-beating gains -- and where you may still find returns that will put popular indexes like the Dow and S&P 500 to shame. But first, let's take a look back at how we've gotten to where we are today.

A tale of two markets
In this month's brand new issue of the Fool's Rule Your Retirement newsletter, Fool retirement expert and financial planner Robert Brokamp takes a close look at the performance of different parts of the stock market. Along the way, he's found one area where a lot of investors like you often don't have as much of their money invested as they should: international stocks.

As Brokamp points out, international stocks are scary. With everything that's going on right now, it's not hard to understand why:

  • The sovereign debt crisis in Europe has gone on for years, dragging down banks like National Bank of Greece (NYSE: NBG), Allied Irish Banks (NYSE: AIB), and Bank of Ireland (NYSE: IRE). Now, the situation in Greece seems to be coming to a head, and even stronger European financial institutions may end up covering some of the losses from a potential Greek default.
  • Natural disasters have wreaked havoc across the globe, from Australian floods that shuttered mining operations at BHP Billiton (NYSE: BHP) to the Japanese earthquakes that caused turmoil not just for manufacturers like Toyota (NYSE: TM) but also the companies around the world that rely on Japanese products.
  • Fraudulent practices are sometimes harder to detect abroad. For instance, several Chinese small caps, including Wonder Auto Technology (Nasdaq: WATG) and most recently A-Power Energy (Nasdaq: APWR), have had their trading halted as investigators look into serious allegations of wrongdoing.

Moreover, emerging market stocks have cooled off in recent months, as China, India, and Brazil fight increasingly tenacious levels of inflation by raising interest rates, which in turn is slowing their respective economies.

Yet as scary as international stocks may be, there's a big reason you need them. Without exposure to foreign markets, you won't earn the best returns you can.

What you need
Here's the thing: Brokamp points out that since 2003, a typical international stock fund has more than doubled the returns of an S&P 500 fund. Even during the 20th century -- widely seen as the heyday for American business -- U.S. stock markets finished in the middle of the pack for total returns.

In addition, foreign stocks help diversify your portfolio in several ways. They give you access to businesses that depend on an entirely different set of customers to prosper. And even though U.S. multinationals have extended their grasp over the global market, they still have to deal with U.S.-centered business conditions -- and have huge exposure to the U.S. dollar. By contrast, international stocks can help shareholders benefit from a weakening dollar, as shares denominated in foreign currencies increase in value even when their underlying fundamentals stay the same.

So how can you best invest in international markets? Index funds are an easy solution, and one I've used in my own portfolio. But they're not the only solution. In his article, Brokamp gives five great ideas of actively managed funds that have stood the test of time, with experienced managers and reasonable expenses.

To find out the names of those five funds -- along with more reasons why owning only U.S. stocks could be hazardous to your financial health -- you should jump at the chance to take a look at the new issue of Rule Your Retirement. The subscription service opens its doors free for 30 days to all takers, letting you see not just the current issue but our entire archive of materials.

Be a globetrotter
As comfortable as it may be to keep your money close to home, your portfolio can work harder for you if it includes some international stocks. Foreign investments can make a big difference in making sure you retire with as much money as possible.

Click here to start your risk-free trial of Rule Your Retirement today.