Should You Invest in Foreign Countries?

Foreign investments add diversity, but there are risks

Investing in foreign countries is a relatively new option for individual investors. Luckily, the advent of internationally focused mutual funds and exchange-traded funds (ETFs) has made it easier than ever. But, is investing abroad a good decision? As always, the decision to invest in foreign countries depends largely on your investment objectives, but this article will take a look at some of the pros and cons.

Why Invest in Foreign Countries?

The primary rule of investing is to seek the highest risk-adjusted return for their capital (also called "alpha"). Basically, you want to maximize profit made beyond the amount of risk taken in any given investment. One of the best ways to accomplish this is through diversification, which has been mathematically proven to enhance risk-adjusted returns.

How much money should you save each month? The simple answer is, as much as you can. Everyone makes a different amount each month. They also have different monthly financial obligations. It is important to realize that one dollar amount is not going to work for everyone. However, there are some basic guidelines you can follow when determining how much you should save each month.

The 10 Percent Rule

The standard that many experts set is to save at least 10% of your income. This is a good starting point, and easy to manage because it is a set amount of money each month. It might be a challenge to stick with it, but it's one many people can manage and increase over time. Eventually, you can work up to 20% or even 30% to increase your savings and plan for your future.

Beyond Retirement Savings