Aussie FIRE | Financial Independence Retire Early Chapter 18: International investing for Aussies
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Sep 15, 2023 Discover why geographic diversification is crucial for Australian investors as local markets can be limiting. Learn how international equities enhance your portfolio with exposure to sectors like tech and healthcare. Explore different ways to invest abroad, including ETFs and managed funds. The discussion highlights the importance of understanding currency risks, tax implications, and how to navigate foreign investments. Ms. FieryIce recommends holding a significant portion of growth assets internationally, ensuring your portfolio is well-rounded and resilient.
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Why Geography Matters
- Geographic diversification protects you from concentrating in a tiny domestic market.
- The ASX is only ~2% of global market cap so international exposure broadens opportunity.
Banking Royal Commission Example
- The Banking Royal Commission caused the ASX 200 to drop ~13% between Dec 2017 and June 2018.
- This example shows how sector-specific shocks can heavily affect a concentrated market.
Balance Country Risk And Growth Stage
- Different countries carry different risks and growth potential at various stages.
- Spreading investments across economic life cycles smooths returns and captures growth shifts.