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Why is it important to invest some of my portfolio outside the U.S.? Aren’t those markets riskier?

We understand US stocks have performed incredibly well relative to other geographies in recent years. But that’s precisely why we recommend investors not overweight U.S. Stocks. International stocks represent more than 60% of global stock market value.

What’s more, over-concentrating your portfolio in one geography can work in the short term, but it’s the equivalent of market timing, which academic research has consistently shown is next to impossible to consistently get right over the long term. We strongly advocate diversifying internationally in case the recent relative outperformance of U.S. versus International markets reverses, as it almost always does.

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.

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