The US stock market has been a rollercoaster lately, leaving many investors wondering if it's time to rethink their strategies. With recent volatility, the question of international investing has become more relevant than ever. For Australian investors, diversifying beyond our shores isn't just a good idea – it's potentially a vital component of a robust and resilient portfolio.

The US Market's Recent Turbulence

We've witnessed significant swings in the US market, influenced by factors like inflation, interest rate hikes, and geopolitical uncertainty. While the US remains a powerhouse, relying solely on its performance can expose your investments to unnecessary risk. A downturn in the US can significantly impact Australian investors with heavy US exposure.

Why International Investing Makes Sense for Australians

Diversification is the cornerstone of sound investment management. International investing allows you to spread your risk across different economies, industries, and currencies. Here's why it's particularly compelling for Australians:

• Reduced Risk: By investing in a variety of markets, you mitigate the impact of any single market's downturn. If the Australian or US market falters, your international holdings can potentially offset those losses.
• Access to Growth Opportunities: Emerging markets, in particular, often offer higher growth potential than developed markets. International investing opens the door to these opportunities, allowing you to participate in economies experiencing rapid expansion.
• Currency Diversification: Holding assets in different currencies can hedge against fluctuations in the Australian dollar. A weaker Aussie dollar can actually boost the returns on your international investments when converted back to AUD.
• Exposure to Different Industries: Different countries lead the way in different industries. International investing allows you to tap into sectors that may be underrepresented in the Australian market, such as technology in Asia or renewable energy in Europe.

How to Invest Internationally

There are several ways Australian investors can gain international exposure:

• Global Managed Funds: These funds invest in a diversified portfolio of international stocks and bonds, managed by professional fund managers.
• Exchange-Traded Funds (ETFs): ETFs track specific international indices, providing a cost-effective way to gain broad market exposure.
• Direct Investment: For more experienced investors, it's possible to invest directly in international stocks, but this requires significant research and knowledge.
• International REITs: Investing in Real Estate Investment Trusts (REITs) located overseas can provide diversification and income streams.

Considerations for Aussie Investors

Before diving into international investing, it's important to consider:

• Currency Risk: While currency diversification can be a benefit, it also introduces risk. Fluctuations in exchange rates can impact your returns.
• Political and Economic Risk: Different countries have different political and economic risks. It's crucial to understand these risks before investing.
• Tax Implications: International investments may have different tax implications than domestic investments. Seek professional advice.
• Fees and Costs: International investments can incur higher fees and costs than domestic investments.

The Bottom Line

In today's interconnected global economy, international investing is no longer a luxury – it's a necessity for Australian investors seeking to build a well-diversified and resilient portfolio. Don't limit yourself to the Australian market. Explore the world of international opportunities and unlock the potential for greater returns and reduced risk. Speak to a financial advisor to determine the best international investment strategy for your individual circumstances.