There’s no one mix of investments that’s right for everyone – your portfolio’s investments depend on your risk tolerance and financial goals. Diversification of any kind – not just international diversification – can help you reduce the risk in your portfolio. You may also diversify by choosing investments from different industries or different asset classes (cash, fixed income or equities).
However, there are benefits to international diversification. Because Canada is over-weighted in resource and financial sectors, achieving broad diversification in Canada alone can be challenging. Investing in different international markets can provide exposure to additional market sectors that may be unavailable in Canada. Large markets, like the U.S. can also provide global exposure due to the higher number of large multi-national companies headquartered there.
A financial advisor can help you decide whether international investing is right for your portfolio and financial goals. Learn more about the risks and potential rewards of international diversification.