International investments are an important part of a diversified portfolio. International investments minimize risk substantially, as well as there will be times when your international stocks outperform your U.S. stocks. Shaping and managing your international investments is, of course, essential for it to be successful. High-quality financial advisors, due diligence, and good habits are the core of your responsibilities.
Why You Need a High-Quality Financial Advisor
Here’s two very basic and good reasons why you need a financial adviser: It’s good to have someone to support your decision-making process, and it’s good to have a knowledgeable source at which to direct your questions. A great example of this is the experts at Cane Bay Partners, they have three “core competencies.” They are: “management consulting, risk management/scorecard development, and service provider analysis.”
An in-depth look at international investments will help you determine if the investment is truly worthwhile and valuable. Financial advisers typically have a specific set of skills and knowledge, something you don’t have unless you’re a financial advisor yourself. You can learn more about what they offer by checking out the Cane Bay Partners LinkedIn page.
Here’s a sampling of what a high-quality advisor offers:
· Regulatory info
· Financial market legalities
· Asset classes
· Best and worst foreign investment markets
· How to stabilize investment portfolios and shape them in an accurate way
The Importance of Due Diligence
To put it simply: Due diligence is the investigation or audit of a potential investment before the closure of the agreement. It can and will serve to confirm all the material facts, in regards to a real estate sale (or stock, bond, or basically anything else). It’s the best way to prevent future complications and/or losses.
There’s a lot of information online about the due diligence process, including an article on Investopedia called Due Diligence in 10 Easy Steps. It outlines the exact steps you need to take to ensure your investment goes smoothly, including how to investigate competitors and risks.
Risk management is one of the most important aspects of due diligence. It’s also among the most important roles of a financial advisor, so if you don’t have experience managing risk, you may want to leave the skill to a qualified professional. For example, Cane Bay Partners use “scorecard creation” to manage risk. “We have researched, devised, and designed specific methodologies in order to segment risk for our clients, which permit us to build scorecards using clients’ data for their specific purpose.” You can learn more about the company by visiting the Cane Bay Partners Facebook page.
Good Habits Managing International Investments
As Frank Armstrong III noted in an article on Forbes.com, “The appropriate allocation to international investments may be much higher than most investors think.” It’s your job to determine just how high you can and should go. By the middle-end of the article, Armstrong notes that the right amount of international exposure is difficult to define – meaning it’s a case-by-case situation – although, he does reach the conclusion that half your portfolio could be in foreign assets. This is based on academic studies and real-world experience.
Of course, it’s essential to closely follow the international financial newspapers, as well as familiarize yourself with worldwide affairs and economics. Follow these good habits, and you’ll have more success in a foreign market. It’s also essential that you diversify on asset class; make sure the ones you choose aren’t too closely related, and don’t neglect small company investments.
Remember: a good and diversified international investment portfolio is advised. There are many ways to protect and manage it, but a high-quality financial advisor and due diligence are the best ways.