Download the Schwab app from iTunes®Get the AppClose

  • Find a branch
To expand the menu panel use the down arrow key. Use Tab to navigate through submenu items.

Why Is Global Investing So Important?

Click to show the transcript

Taking a global perspective means incorporating both U.S. and international stocks into your portfolio, and it is vital to successful long-term investing.  

The fact is, the marketplace is truly global, and when it comes to investing, geographic location matters a lot less than it used to.

You know, at one time, the fortunes of companies largely depended on the local environment. Only 30 years ago, international trade accounted for just one-third of the world economy; but today, it accounts for nearly two-thirds.

You see this theme of globalization everywhere, even in championship golf. Here again, things have really changed from 30 years ago when the top golfers came from just one or two countries. 

There’s a striking resemblance between the national diversity of players in the 2015 Masters Tournament and the countries that have stocks in the MSCI All Country World Index. In both cases, roughly 50% are based in the U.S., 16% are in Europe, and 13 to 14% come from the emerging markets. 

Like top golfers, leading companies now come from all over the globe, which means that investors need to think less about borders and more about adopting a global perspective.

To get true global exposure, 25 to 50% of your stock market portfolio should be invested outside the United States. That number is likely to continue to increase over time as international companies evolve and globalization becomes even more entrenched.

Of course, you should keep in mind that the future may evolve in unexpected ways. So, investing in global stocks still carries risks.

But if you limit your international exposure, you may miss out on attractive growth opportunities, as well as the increased diversification that can help buffer your portfolio against market downturns. For more on that, check out the next video.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

Definitions

MSCI All Country World Index covers over 9,000 securities across large-, mid- and small-cap size segments and across style and sector segments in 46 Developed and Emerging Markets.

© 2015 Charles Schwab & Co., Inc. All rights reserved. Member SIPC.

(0815-7K91)

Thumbs up / down votes are submitted voluntarily by readers and are not meant to suggest the future performance or suitability of any account type, product or service for any particular reader and may not be representative of the experience of other readers. When displayed, thumbs up / down vote counts represent whether people found the content helpful or not helpful and are not intended as a testimonial. Any written feedback or comments collected on this page will not be published. Charles Schwab & Co., Inc. may in its sole discretion re-set the vote count to zero, remove votes appearing to be generated by robots or scripts, or remove the modules used to collect feedback and votes.