International investments or international
stocks have often outperformed U.S. investments and US stocks.
However, most US investors shy away from international
investments because they believe the international investments
are more risky than US investments. Some investors believe that
international investments are too risky and/or don't perform as
well as domestic stocks.
While there may be different risks
associated with international investments, the truth is that
international investments have often outperformed domestic
stocks. Many investors remember the roaring 1990s, when U.S.
stocks rose dramatically - well ahead of international
investments. However, in both the 1970s and 1980s,
international stocks outperformed U.S. stocks.
International market investments
Average annual returns were determined by
the performances of the MSCI EAFE (European, Australiasian, Far
East) Index and the Standard & Poor's 500 Stock Index (the
S&P 500). The MSCI EAFE Index is a commonly used measure of
the international investments stock market. The S&P 500 is
a commonly used measure of the broad U.S. stock market.
Average annual stock market returns in
several countries - including Finland, Spain, and Sweden - have
outpaced the U.S. stock market over the past 10 years.
No one knows for sure when domestic
investments or international investments will outperform
the other. The only way to reap the potential rewards of both
domestic stocks and international investments is to stay
invested in both.