One country is a concentration
Even a large one.
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International diversification
Companies outside the US make up a large part of the world’s stock market. Owning some spreads country risk.
In this lesson you will
- Explain why investors add international stocks
- Name currency and political risks
- Check existing international exposure
A portfolio of only US companies depends on one economy, one currency and one set of policies. International funds add companies from developed and emerging markets.
Why add it
- Different economies grow at different times.
- Leadership between US and international markets has changed over decades.
- It reduces dependence on any single country.
Extra risks
International investing adds currency risk — returns change when exchange rates move — and, in some markets, political and regulatory risk. Emerging markets can be more volatile.
How much
There is no single correct share. Some investors match each region’s share of global market value; others hold less. A total world fund holds both US and international companies in one fund.
Check what you already own
Large US companies earn money abroad, and some target-date funds already include international stocks. Look before you add. Education only — GetGuac does not recommend specific funds or investments.
By the GetGuac team · Editorial policy
Three ideas to keep
Currency cuts both ways
Exchange rates add and subtract.
You may already own some
Target-date funds often include it.
Do it in 4 steps
Check current holdings
US vs international share.
Decide a target share
Write it down.
Choose broad over narrow
Regions, not single countries.
Rebalance to target
Yearly.
Checking your split
Illustrative $20,000 portfolio.
| Holding | Amount | US | International |
|---|---|---|---|
| US total market fund | $12,000 | $12,000 | $0 |
| Target-date fund (40% international) | $8,000 | $4,800 | $3,200 |
| Total | $20,000 | $16,800 | $3,200 |
$3,200 ÷ $20,000 = 16% international — more than none, though the target-date fund was the only source.
Where this usually goes wrong
- Assuming US-only is fully diversified
- Betting on a single foreign country
- Forgetting international stocks inside other funds
Estimate the international share of your investments using each fund’s fact sheet.
Tools and guides for this lesson
Quick quiz
1. International stocks add which extra risk?
2. A total world fund holds…
3. Before adding international funds you should…
0 of 3 answered
Puzzle
Portfolio $30,000: $21,000 US, $9,000 international. What share is international?
Show the answer
30%
$9,000 ÷ $30,000 = 0.3.