Many people these days wonder about how to purchase an international income investment.
All the World's Economies and Currencies Have Problems
Perhaps they're worried about the economy of their own country (the United States, Japan, Europe, and other developed nations are all having financial problems), or their own country's currency (the US dollar and euro are having big problems now, and other major currencies all have long-term weaknesses and issues).
Maybe they just realize the value of diversifying their investments. There's money to be made all over the world.
I personally believe that international diversification is a good idea.
Diversification Reduces Risk, Though It's Not Guaranteed
The United States is no longer the all-dominant economic power in the world, and it's going downhill faster than it has to because of various economic and political factors I don't see going away any time soon.
Yet Europe and Japan also have major issues, including demographic trends that indicate they'll cease to exist as countries.
Canada and Australia both have physical room for a lot of growth and a lot of natural resources.
The developing world has the largest potential, with several billion young people, but will require huge investments in education, and restructuring to eliminate political instability.
I don't feel comfortable with my retirement income depending on the economic welfare of any one country or one currency.
Many Mutual Funds and Exchange Traded Funds Focus on Countries and Regions
It's easy to buy mutual fund shares and Exchange Traded Funds (ETF) that specialize in one foreign country or region. You should understand one thing -- the process of that fund buying and owning securities in another country is more expensive than doing so in their own country, so foreign investing is slightly more expensive. That does make a difference.
However, I believe that reducing overall portfolio risk through geographic diversification is worth the price. But it does make sense to look closely and choose only the mutual funds and ETFs with the lowest expense ratios. Often, they are put out by Vanguard.
Stick With Companies that Pay Dividends
As income investors, you should consider ETFs based on Mergent Dividend Achievers Indexes. They have several for Canada, and one for the rest of the world. Wisdom Tree also offers a number of ETFs on foreign companies that pay dividends, both in the developed and developing worlds.
Diversify the Types of Income Investments You Own
You can also find mutual funds and ETFs for foreign Real Estate Investment Trusts, sovereign bonds, corporate bonds, the foreign equivalents of U.S. TIPS, and utility companies.
If you have just a small amount of money now and will be investing through regular deposits, look for a mutual fund. When you find one, contact the fund company directly through their 800# or website. Do NOT use a broker, or you may have to pay a front end load, which is a ripoff.
However, if you have money to invest right away, open a brokerage account and buy the Exchange Traded Funds you want. You will pay a brokerage commission for the transaction, but in the long run they're cheaper than mutual funds.
There are many opportunities to investing in a foreign income investment.
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