Given the recent economic troubles in Europe, should I continue putting money in international stocks or other investments? How exposed are my investments in TIAA-CREF products to what’s happening in Europe?
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Reasons to consider investing overseas:
1. Low correlation. International stocks, bonds, real estate and other foreign investments often rise and fall at somewhat different times than their domestic counterparts. This low correlation, which is a measure of whether investments tend to move up and down at the same time, provides diversification to a portfolio and offers a better combination of risk and return.
2. Some foreign countries have generated and will likely continue to produce higher economic growth rates than in the U.S. Since investment returns, in the long run, are linked to economic growth, having some foreign investments is a good way to take advantage of expected growth in those countries. Keep in mind that there will likely be considerable volatility in those investments so investors shouldn’t become overenthusiastic.
We can help build or rebalance a portfolio to suit you.
Short-term volatility need not be a reason for investors with a long-term horizon to change course, however. If this is your situation, you probably don’t want to react in a way that would lock in what are otherwise paper losses. In addition, TIAA-CREF’s broadly diversified portfolios have exceedingly modest exposure to Greece, Italy, Ireland, Spain, and Portugal. Investments in those five countries comprise less than one percent of TIAA-CREF’s combined portfolios, as of March 31, 2010. TIAA-CREF continually reevaluates its portfolio holdings within an ever-changing market environment, to reaffirm our rationale for each investment’s long-term value.
Let our advisors help walk you through building a portfolio allocation that suits you, or rebalancing an existing account. If you are uncomfortable with the market risk exposure in your current portfolio, TIAA-CREF can help you understand what changes to your portfolio would mean as it relates to your overall retirement plan or goals.
You can schedule an appointment or call us at 888 842-0318. There are also tools on tiaa-cref.org, like our Planning Tools and Calculators page, which includes a helpful asset allocation calculator and a retirement goal evaluator.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
The views expressed here may vary in response to changing economic and market conditions. Past performance is not indicative of future results. The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Strategies discussed do not guarantee a profit or ensure against loss. Foreign investing involves the risk that securities of foreign issuers may lose value because of erratic market conditions, economic and political instability or fluctuations in currency exchange rates.
Neither rebalancing nor asset allocation can eliminate the risk of investment losses or guarantee that an investor’s goal will be met.