Beyond Local - International Share Diversification
Episode description
Most of us, when we start investing, will buy Australian shares. We typically gravitate towards businesses that we recognize, perhaps one of the miners, a bank, or a retailer that we walk past at the local shopping centre. Before long we stumble across exchange traded funds, and most people tend to gradually invest more and more in these vehicles over time due to the lower level of mental energy required in making the investments, and their significantly lower level of volatility.
Having a home country bias within portfolios is not something unique to Australia. Almost every country in the world sees the same thing. In some cases the portfolio bias can take on a degree of patriotism.
My question though is whether as investors, aiming to grow our wealth and in so doing achieve the choice and flexibility that enables us to lead interesting lives, this bias makes sense? Or should we look overseas to international shares?