Stock markets crash. Then they recover. It happens. But usually stock markets all over the world do not go down at the same time. The US market crashed in 1987, but a lot of the other foreign markets went down only some or not at all. In the 80's, if you had stock in markets in the US and in markets abroad, you might not have taken as hard a hit.
Investing in overseas stock is one way to reduce risk, especially if you are concerned about the US economy, the price of the dollar and the government. If you invest in large US companies, then you are getting some international benefit because most of the larger US companies do business worldwide. You may want to also consider investing in foreign company stock.
Investing in stocks around the globe isn't going to make your portfolio bulletproof, but it will help reduce the pain when disaster hits. There isn't anything you can do if the markets take a dive on a global scale. So what else can one do to reduce risk?
Diversification in your stock purchases is a good first step, but there are other things to be done. Real estate, while currently down in the US, usually offers positive investment opportunity.
One final thing to consider is the amount of time you hold on to your investments. The stock market will rise and fall, yet the longer you hold on to your investments, the better your chances of coming out on top. If you only hold onto your stock for a year, your stock may fall. But if you hold onto your stock for a five year period, the chance of losing your money lessens. Hold onto your portfolio for more than twenty years and your risk is greatly diminished. Most stock market investors in the US who've held on for twenty or more years have not lost any money, in fact, made significant gains.
Investing in overseas stock is one way to reduce risk, especially if you are concerned about the US economy, the price of the dollar and the government. If you invest in large US companies, then you are getting some international benefit because most of the larger US companies do business worldwide. You may want to also consider investing in foreign company stock.
Investing in stocks around the globe isn't going to make your portfolio bulletproof, but it will help reduce the pain when disaster hits. There isn't anything you can do if the markets take a dive on a global scale. So what else can one do to reduce risk?
Diversification in your stock purchases is a good first step, but there are other things to be done. Real estate, while currently down in the US, usually offers positive investment opportunity.
One final thing to consider is the amount of time you hold on to your investments. The stock market will rise and fall, yet the longer you hold on to your investments, the better your chances of coming out on top. If you only hold onto your stock for a year, your stock may fall. But if you hold onto your stock for a five year period, the chance of losing your money lessens. Hold onto your portfolio for more than twenty years and your risk is greatly diminished. Most stock market investors in the US who've held on for twenty or more years have not lost any money, in fact, made significant gains.