Daily Gains Letter

Going Global Could Help Your Plans for Retirement

By for Daily Gains Letter | Feb 22, 2013

220213_DL_zulfiqarSometimes the payoff can be significant for investors if they look at places that are not getting a lot of attention. As they say, in a gold rush, the person selling shovels can make more money than those who are looking for the yellow shiny metal.

The same goes for long-term investing. Now, thanks to all the financial innovation and information being readily available, investors don’t really have to work as hard to look for information and research.

Back in the good old days (read 1980s), investors kept their money close—they used a mixture of local stocks and bonds. The reason for them to invest in domestic companies was simple; it was difficult to invest globally due to factors such as a lack of information or a language barrier.

Now things have changed, and investing globally isn’t a difficult task anymore—the best part is that you can now invest globally from the comfort of your home.


With that said, the question still remains: where should an investor go? Is going to the eurozone a good idea? Or should they stay local until things in the global economy get better? Or should they just hide their money under the mattress?

No matter how the markets are behaving or what economic conditions are present, there are always opportunities available. Now that investors can look globally, the amount of opportunities available has increased substantially.

Consider Turkey, for example. Recently, the country regained an investment grade credit rating from Fitch Ratings. Since 2002, the country has been growing at an average of five percent per year. In addition, as the eurozone crisis took its toll on the major countries in the global economy, Turkey was the fastest-growing economy in Europe in 2011. (Source: “UPDATE 4-Turkey regains investment grade rating after long wait,” Reuters, November 5, 2012, last accessed February 21, 2013.)

The chart below is for iShares MSCI Turkey Invest Mkt Index (NYSEArca/TUR). This fund allows investors in the U.S. to take advantage of growing Turkey’s economy. It invests in Turkish companies and seeks to attain a return similar to that of the equity market in Turkey. (Source: “iShares MSCI Turkey” iShares web site, December 31, 2012, last accessed February 19, 2013.)


                                                dg_02222013image002Chart courtesy of www.StockCharts.com


In addition to saving an investor’s research time, this ETF also provides diversification across different sectors in the country—something that can cost a lot if investors were to try to achieve it on their own.

This ETF is just one of the few ways you can profit from global growth. There are many other ETFs that cater to different regions and countries around the world. In addition to all this, through these types of ETFs, instead of just diversifying in one country, investors can now diversify globally—which significantly reduces risk.

When planning for retirement, investing in other countries can help your portfolio grow faster. Don’t forget; opportunities are out there, you just have to look in the right places—one downturn in the markets shouldn’t discourage you from investing.


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