Can anyone tell if i should invest in mostly us stocks r international?

Question

I've always been told to invest one third into foreign stocks and the rest in the US. Now money magazine and news reports r telling us to invest 1/3 in US stocks and the rest international. I'm worried about s******g up my 401k

Answer 1

Hard to track foreign stocks.  I lean toward your first thought, thats how im invested.  About 20-30% international, 20% in market tracking, 20% in small caps and the remainder in Large cap funds.

Answer 2

First, relax.

There are only two real ways to s***w up your 401(k):

1) Don't invest

2) Put everything in one fund.

Now, for your question.

I've heard the same advice, and there's a reason for the shift.

Regardless, go with a mix you feel comfortable with.

US markets have long been considered the deepest and most informative, meaning that the information you received for making decisions was better on the NYSE, AMEX and NasdaQ than on any other exchange. As more nations (especially in the developing world) develop their financial markets, those are becoming safer. International used to mean a smattering of emerging markets stock mixed with European companies.

Now, international stock can mean European and Asian stocks traded in well-developed and well-regulated European and Asian markets (such as FTSE and Nikkei), as well as emerging markets such as Brazil, China and Russia, where the risk is higher but so is the potential return.

Where you invest is up to your appetite for risk. There is some merit to increasing the proportion of international shares because this is where the world is developing most quickly, while the US economy tends to be made of more mature companies with lower rates of growth.

International investment to take advantage of appreciating foreign currencies doesn't help you unless you actually purchase the foreign shares in foreign currency - which means you'd have to do it on the international markets, which you may not be allowed to do.

Instead, a safe way to do this is to invest via US-based mutual funds. All of the major funds have some sort of mix of region-specific and industry-specific foreign funds. I'm not advocating for or against them, but as an example, Fidelity included about a dozen international funds in the 401(k) of my former employer - including a Latin American fund, a Euro Zone fund, and an Emerging Southeast Asian fund.

As with any investment, there are risks and rewards and you should be careful to consider each decision.

One last caution - because many foreign companies sell shares via US as well as foreign exchanges, be careful not to double-expose yourself to the same company. For example, if you own shares in a Blue Chip fund with the top 50 industrial companies in the US, and you own shares in a Japan fund, you will likely have a large overall ownership in Toyota Motors, which is listed both in the States and on the Nikkei.

Answer 3

I think you will probably find varying opinions. Let me ask you one thing. are you young? If you are under 30 you can take more risk with your 401k and have alot more time to ride out any market fluctuations. INternational and developing markets defiantely offer the chance at higher returns, however you will be taking additional risks.  I would recomend putting most of your 401k into a global equity sort of mutual fund where it has a blend of investments from all over the world. maybe 40%. Then put another 40% into a US stock index fund, something that tracks the S&P 500.  The remaining 20% rest put into something more conservative like investment grade bond funds.  As time passes and you grow closer to retirement you can allocate this more heavily towards the fixed income side and away from equity. The goal being to have most of your retirement savings in low risk fixed income investments by the time you want to retire.