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Loading ...Investing Internationally - Is it Risky?
April 10, 2008 by Josie Kay
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Q. My adviser has recommended that I invest some of my money overseas. It sounds a bit risky?
Josie’s Answer - The main reason why you would allocate some of your funds, overseas is for diversification.
For your info, the Australian sharemarket represents around 2.3% of the world’s total sharemarkets, which means that nearly 98% of the world’s shares are not available to you.
A bit of trivia, you will be surprised to know that Australia’s sharemarket is actually smaller than the markets of Switzerland (3.1%)The size of our market is not too dissimilar to some of the world biggest companies.
Did you know that Microsoft alone is currently valued at around $400B and the TOTAL of the Australian share market is approx $1500B.According to Perpetual Investments, there are approximately 2,077 companies listed on the Australian ASX (end 31 December 07) listed and the top 10 companies represent more than 40% of the market (BHP 10.5%, Commonwealth Bank (6.1%).
We have all heard about not having all your eggs in the one basket – outside Australia there are approx 15,000 listed companies and by investing internationally you will have exposure to companies like Johnson and Johnson, Nokia, Toyota.
However, you need to be aware; there is the added risk of currency fluctuations which affect your return. Also important to remember, you should take a long term perspective (at least 7 years +). Good luck.
Don’t forget that the above information is general in nature and not specific to your goals and objectives. It is recommended that you seek personal financial advice specific to your needs.
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