How do you invest locally but still get exposure to international markets?
As an investor you know the importance of diversifying your portfolio. By investing internationally, you can protect your portfolio from market declines. So, is it better to buy International Index Funds? How do you buy stocks in other parts of the world? How does the currency exchange work? How do you invest locally but still get exposure to world markets?
International exposure is important, say there’s a recession in North America but European stocks are doing well, it would be beneficial to have some exposure to European stocks to offset the declines in North America. However, you don’t have to worry about buying stocks on international markets. Nor do you have to worry about currency fluctuations, or paying taxes in other countries.The answer is simple. Buy quality dividend paying companies that operate worldwide. I focus on buying Canadian and US companies that operate all over the world. Let’s take a look at a few international companies:
Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, offering over 500 brands to people in more than 200 countries. Together with their bottling partners, they employ more than 700,000 people around the world. 47% of sales now come from outside North America.
Exxon Mobil (NYSE: XOM) explores for and produces crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. 73% of sales come from outside North America
Apple (NASDAQ: AAPL) operates more than 450 Apple retail stores around the world, which employ about 50,000 people. 62% of sales come from outside North America
General Electric (NYSE: GE) operates in more than 170 countries, and has 295,000 employees. 52% of sales come from outside North America
Royal Bank of Canada (TSX: RY) is one of the largest Canadian banks and operates in 37 countries. 38% of sales come from outside Canada
Sun Life Financial Inc (TSX: SLF) provides diversified financial services, employs 32,900 people, and has offices in 26 countries. 47% of sales come from outside North America. As you can see these companies operate world-wide, and some of them generate more in sales outside of their home country. As an investor you don’t need to worry about which world markets are performing poorly, currency fluctuations, or paying foreign taxes. By investing in these types of companies you get exposure to world markets. These companies have large financial departments with goals to take advantage of world-wide opportunities for growth, you don’t need to worry about it yourself.
As always focus on buying quality companies like these when they are priced low (undervalued), and when they pass the 12 Rules of Simply Investing.
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