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Going global for greater returns

By Jennie L. Phipps · Bankrate.com
Sunday, August 14, 2011
Posted: 7 am ET

Could going global with your retirement planning mean a bigger nest egg and greater security?

Yes, thinking international is smart, says Aaron Katsman, a financial adviser with Portfolio Resources in Miami. Katsman, an American who is based in Israel, has clients worldwide. "My philosophy is that however people allocate their retirement funds, they have to go global because that's where the growth is."

He's particularly enthusiastic about South America. "If you look at Brazil, Chile, Peru, Columbia, you see where the world is moving. They have young, innovative, entrepreneurial populations and as a result, the middle class has shot up and the economy is exploding.

"If you allocate 40 percent of your portfolio to international investments -- Asia and South America -- you can easily make 7 percent or 8 percent. Not only are the returns greater, but if the dollar stays steady or drops, you get that extra boost when you convert back into U.S. dollars," Katsman says.

Katsman likes the same sorts of investments that conservative investors rely on when they invest in the U.S. market: stocks, especially those that pay good dividends; bonds from stable, growing countries like Brazil and Australia;  and exchange-traded funds -- ETFs -- that track a basket of foreign stocks and pay a good dividend, often much better, Katsman points out, than ETFs that track U.S. stocks.

"I'm not saying to put all of your net worth in these types of investments; the solid companies that do business worldwide like Johnson & Johnson should be the cornerstone of your portfolio, but some international exposure can make a big difference in your retirement," Katsman says.

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