401k Investing: Seeking Oversees Opportunities

In the area of 401k investing, there are many potential investments that you could choose. However, many investors are choosing to venture outside of the domestic markets and pursue opportunities overseas. Here are a few things to consider about investing your 401k resources into overseas investments.


One reason that many investors choose to go overseas with part of their money is that it provides diversification. You can attempt to diversify your holdings by purchasing many different stocks, mutual funds, and bonds. However, if you are purchasing all of these securities from the same economy, you are not truly diversified. If a recession occurs in your country, it could have devastating impacts on your portfolio. You never know when a country will completely be eliminated in one way or another. Therefore, if you want to be truly diversify, you should put some of your assets into foreign countries. Regardless of what happens to an individual country, you know that other countries will still be doing fine. This means that even if the country in which you live is doing poorly, you could still post gains in your retirement account by venturing overseas with your investments.

Emerging Markets

Many investors choose to put their money into emerging markets. Emerging markets are areas of the globe that are currently under rapid development. These are areas that have been underdeveloped up until this point in history. When an area starts to become developed, a period of extreme growth tends to follow. The area will have a new infrastructure that allows for growth in many different sectors of the economy. Every sector within this market will tend to grow very rapidly. Therefore, if you can successfully identify an emerging market at a time, you could potentially bring in a greater return for your retirement account.

Many ETF's and mutual funds are starting to see the value in investing in emerging markets. For example, you will find several funds that are currently investing in the Asian market. Because of the rapid financial and economic growth of the Asian market, there is a huge opportunity for foreign investors. Instead of trying to identify individual companies in a foreign market, it is much easier for investors to choose an ETF or mutual fund to do that for them. The fund will take the resources of all of the investors and choose a diversified group of companies to invest in in the emerging market.

Foreign Government Bonds

Another area that many investors are currently getting into is foreign government bonds. There are many foreign governments that sell bonds to investors in order to raise money. If you locate a country that has a stable government, purchasing some of their bonds could be a very smart investment. You will be able to obtain a regular interest payment from the foreign government with a very low amount of risk involved. Therefore, you can still make a nice return without venturing into foreign stock markets.

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