International Investing


Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on July 04, 2023

Are You Retirement Ready?

What Is International Investing?

International investing refers to investing in assets outside of one's domestic market, such as stocks, bonds, and real estate in other countries.

It is a way to diversify one's portfolio and potentially gain exposure to new markets and opportunities.

However, it also comes with risks, such as currency risk and political risks, that should be considered before investing.

International Investing Vehicles


Individual Stocks

Investing directly in foreign stocks allows investors to have a direct stake in a specific company. This approach requires thorough research and understanding of the company and its industry.

American Depository Receipts (ADRs)

American Depository Receipts (ADRs) are a more accessible way for U.S. investors to invest in foreign stocks, as they are traded on U.S. stock exchanges and are priced in U.S. dollars.

Mutual Funds

International Mutual Funds

These funds invest in stocks from countries outside the fund's home country, providing exposure to a diversified portfolio of international stocks.

Global Mutual Funds

Global funds invest in stocks from around the world, including the fund's home country, offering a mix of domestic and international investments.

Regional Mutual Funds

Regional funds focus on a specific geographic region, such as Asia or Europe, providing targeted exposure to a particular area.

Country-Specific Funds

These funds invest primarily in stocks from a single country, allowing investors to concentrate their investments in a particular market.

Exchange-Traded Funds (ETFs)

Exchange-Traded Funds (ETFs) provide a convenient and cost-effective way to invest in international markets, as they track the performance of an index or a basket of stocks.


Sovereign Bonds

Foreign governments issue sovereign bonds and can offer attractive yields and diversification benefits.

Corporate Bonds

Corporate bonds are issued by foreign companies, providing exposure to the credit risk and performance of these companies.


Eurobonds are bonds issued in a currency other than the issuer's home currency, providing additional currency diversification.

Real Estate

Investing in international real estate through direct ownership or real estate investment trusts (REITs) can provide exposure to foreign property markets and potential income streams.


Commodities such as gold, oil, and agricultural products can be traded on international markets, offering exposure to global supply and demand dynamics.

International Investing Vehicles

International Investing Strategies

Passive Investing

Index Funds

Index funds are a cost-effective way to gain exposure to international markets, as they track the performance of a specific market index.


Exchange-traded funds provide a convenient way to invest in international markets, offering diversification, liquidity, and cost advantages.

Active Investing

Stock Picking

Investors can actively select individual foreign stocks, requiring thorough research and analysis of the companies and industries involved

Mutual Fund Selection

Actively managed mutual funds can offer professional management and targeted exposure to specific countries, regions, or industries within international markets.

Asset Allocation

Determining the Appropriate International Exposure

Investors must consider their risk tolerance, investment objectives, and time horizon when determining the appropriate level of international exposure within their portfolio.

Rebalancing Strategies

Regularly rebalancing the portfolio ensures that the desired level of international exposure is maintained, preventing overconcentration or underallocation in certain markets.

Benefits of International Investing

Diversification Benefits

Investing internationally provides diversification benefits, as it spreads risk across various countries and regions. This helps reduce the impact of a downturn in a specific country or region on the overall portfolio.

Exposure to Faster-Growing Economies

Some foreign markets, particularly in emerging and developing economies, are growing at a faster pace than developed markets. By investing in these markets, investors can potentially benefit from higher growth rates.

Potential for Higher Returns

International investments offer higher returns compared to domestic investments, as foreign markets may present unique opportunities with lower valuations or higher growth prospects.

Access to Unique Investment Opportunities

International investing allows investors to access industries and companies not available in their domestic market, providing exposure to new technologies, sectors, and business models.

Currency Diversification

Investing in foreign assets provides currency diversification, which can help mitigate currency risk and potentially improve overall portfolio performance.

Risks of International Investing

Currency Risk

Investing in foreign assets exposes investors to currency risk, as fluctuations in exchange rates can impact the value of investments. Currency hedging and diversification strategies can help mitigate this risk.

Political Risk

Political instability, policy changes, and regulatory uncertainty in foreign countries can impact the performance of international investments. Researching and understanding the political environment of the countries in which you invest is crucial for risk mitigation.

Economic Risk

Economic factors such as interest rates, inflation, and economic growth can influence the performance of international investments. Monitoring these factors and diversifying across multiple economies can help manage this risk.

Regulatory Risk

Differences in regulations, legal systems, and tax regimes between countries can affect the returns and risks associated with international investments. Familiarizing yourself with these factors and seeking professional advice can help you navigate these complexities.

Liquidity Risk

Investing in less liquid international markets can make buying or selling investments at the desired price or time more difficult. Diversifying across different market capitalizations and investment vehicles can help manage liquidity risk.

Benefits and Risks of International Investing

International Investing Process

Assessment of Investment Objectives

Understanding your investment objectives, such as income generation, capital appreciation, or preservation, is essential when selecting appropriate international investments.

Determination of Investment Risk Tolerance

Knowing your risk tolerance is crucial when deciding the level of international exposure and the types of investments to include in your portfolio.

Research and Analysis

Macroeconomic Factors

Analyzing factors such as GDP growth, inflation, interest rates, and current trends can help identify attractive international investment opportunities.

Industry Analysis

Understanding the dynamics of specific industries within foreign markets can provide insights into potential investment opportunities and risks.

Company-Specific Factors

Analyzing financial statements, management teams, competitive advantages, and growth prospects of individual companies can help identify attractive international stocks.

Fund Manager Track Record

Evaluating fund managers' performance and track record can provide insights into the quality and consistency of actively managed international mutual funds.

Portfolio Construction

Creating a well-diversified international portfolio involves selecting investments that align with your objectives, risk tolerance, and desired level of exposure.

Monitoring and Evaluation of Performance

Importance of Ongoing Monitoring

Regularly reviewing and monitoring your international investments can help identify emerging risks, performance trends, and potential rebalancing needs.

Key Performance Indicators (KPIs)

Tracking Key Performance Indicators (KPIs) such as returns, volatility, and risk-adjusted performance can help evaluate the success of your international investments.


Comparing the performance of your international investments against relevant benchmarks or indices can provide valuable insights into their relative performance.

Adjusting and Rebalancing

Making adjustments to your international portfolio, such as adding or reducing exposure to specific investments or markets, can help maintain your desired risk and return profile.

Role of Professional Financial Advisors in International Investing

Benefits of Working With a Professional

Financial advisors can provide expert guidance, personalized advice, and ongoing support to help investors navigate the complexities of international investing.

Types of Financial Advisors

Various types of financial advisors specialize in different aspects of international investing, including wealth managers, financial planners, and investment advisors.

Fee Structures

Financial advisors may charge fees based on assets under management (AUM), hourly rates, or flat fees. Understanding these fee structures can help you select an advisor that best fits your needs and preferences.

Selecting a Financial Advisor

When selecting a financial advisor, factors include experience, credentials, communication style, and alignment with your investment goals and objectives.

Ethical and Sustainable International Investing

Environmental, Social, and Governance (ESG) Criteria

Environmental, Social, and Governance (ESG) criteria evaluate a company's environmental, social, and governance practices, providing investors with insights into their investments' sustainability and ethical impact.

Socially Responsible Investing (SRI)

Socially Responsible Investing (SRI) involves selecting investments based on specific ethical, social, or environmental criteria, often excluding companies or industries that do not meet these standards.

Impact Investing

Impact investing aims to generate measurable positive social or environmental impact alongside financial returns, often focusing on specific themes or issues such as clean energy, poverty alleviation, or gender equality.


International investing is vital to a diversified investment portfolio, offering potential benefits such as higher returns, exposure to faster-growing economies, and access to unique opportunities.

By understanding the various types of investments, strategies, risks, and factors involved in international investing, investors can make more informed decisions and optimize their portfolios for long-term success.

It is essential to continue learning and seeking professional guidance to navigate the complex and ever-evolving world of international investing.

International Investing FAQs


About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

Discover Wealth Management Solutions Near You