Diversification -- spreading your investment risk among foreign companies and markets.
Growth -- taking advantage of the potential for growth in some foreign economies, particularly in emerging markets.
By including exposure to both domestic and foreign stocks in your portfolio, you'll reduce the risk that you'll lose money and your portfolio's overall investment returns will have a smoother ride. That’s because international investment returns sometimes move in a different direction than U.S. market returns. Even when international and U.S. investments move in the same direction the degree of change may be very different. When you compare the returns from emerging international markets with U.S. market returns you may see even wider swings in value.
Of course, you have to balance these considerations against the possibility of higher costs, sudden changes in value, and the special risks of international investing.
