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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.

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Wealthfront prepared this article for informational purposes and not as an offer, recommendation, or solicitation to buy or sell any security. Wealthfront and its affiliates may rely on information from various sources we believe to be reliable (including clients and other third parties), but cannot guarantee its accuracy or completeness. See our Full Disclosure for more important information.

Wealthfront and its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisor. Financial advisory and planning services are only provided to investors who become clients by way of a written agreement. All investing involves risk, including the possible loss of money you invest. Past performance does not guarantee future performance.