Should You Invest In International Stocks Now?

Ever wondered if you’re missing out on a hidden gem in the investing world? Picture this: while everyone’s buzzing about Wall Street, markets across the globe—think Japan, India, or even Australia—are quietly stealing the show in 2025. It’s like choosing to explore a new cuisine when you’ve been eating the same dish for years. International stocks are outpacing their U.S. counterparts this year, and it’s got investors wondering: is now the time to go global? Let’s unpack why diversifying beyond U.S. borders might just be the smartest move you make for your portfolio.

Why International Stocks Are Turning Heads

The numbers don’t lie. In 2025, the MSCI ACWI ex-USA index, which tracks stocks from nearly every corner of the globe except the U.S., has surged by an impressive 15.7%. Meanwhile, the S&P 500, the poster child of U.S. markets, is lagging behind with a modest 1.5% return. That’s a gap you can’t ignore. I’ve always found it fascinating how markets can shift like tides—sometimes it’s the U.S. leading the charge, other times it’s the rest of the world. So, what’s driving this global rally?

Shifting Investor Sentiment

Investors are starting to adopt what some call an “Anywhere But USA” mindset. Concerns about U.S. market volatility, policy uncertainties, and relatively weaker performance have pushed folks to look elsewhere. According to financial planners, this shift isn’t just a whim—it’s a response to real economic signals. Global markets, particularly in developed economies like Japan and Europe, and emerging markets like India and Latin America, are showing resilience and growth potential that’s hard to overlook.

Global markets offer exposure to unique economic cycles and growth drivers that the U.S. simply can’t replicate.

– Certified financial planner

It’s not just about chasing hot returns, though. Diversifying into international stocks can act like a safety net, cushioning your portfolio against U.S.-specific risks. Think about it: if the U.S. economy hits a rough patch, having investments in, say, Asia or Europe could keep your portfolio afloat.

A Historical Perspective

Here’s a reality check: the U.S. hasn’t always been the golden child of investing. From 2001 to 2010, international stocks crushed it, with the MSCI ACWI ex-USA posting a cumulative return of 71.5% compared to the S&P 500’s 15%. That’s a decade where going global paid off big time. Trends like these tend to ebb and flow, and 2025 might just be signaling the start of another global surge. In my experience, sticking to one market is like betting on a single horse—you might win big, but you’re also taking a bigger gamble.

So, should you jump on the international bandwagon? Maybe. But before you do, let’s talk about why diversification matters and how to do it without losing your shirt.

The Case for Global Diversification

Diversification isn’t just a buzzword; it’s a lifeline. Spreading your investments across different markets means you’re not putting all your eggs in one basket. International stocks give you exposure to unique industries, different economic cycles, and varying monetary policies. For instance, emerging markets often thrive on rapid growth, while developed markets offer stability. Together, they can balance out the ups and downs of your portfolio.

Here’s why I think going global makes sense:

• Reduced Risk: U.S.-specific events—like political shifts or economic slowdowns—won’t tank your entire portfolio.
• Access to Growth: Emerging markets like India and China are tapping into massive consumer bases and tech innovations.
• Currency Benefits: A weaker U.S. dollar can boost returns from foreign investments when converted back.

But here’s the kicker: you don’t want to overhaul your portfolio based on a single year’s performance. Chasing trends is like trying to catch a wave—you might ride it, or you might wipe out. Instead, think long-term. A diversified portfolio with international exposure can smooth out the ride over decades.

How Much Should You Invest Internationally?

So, how much of your portfolio should go global? There’s no one-size-fits-all answer, but financial pros often suggest allocating 20-40% to international stocks, depending on your risk tolerance and goals. If you’re younger and can stomach some volatility, leaning toward the higher end might make sense. Older investors might prefer a smaller slice to keep things stable.

Personally, I lean toward the middle ground—around 25%. It gives you enough exposure to capture global growth without feeling like you’re abandoning the U.S. market. But whatever you choose, keep it consistent. Rebalance your portfolio annually to avoid drifting too far from your target.

How to Invest in International Stocks

Ready to dip your toes into global markets? The good news is, you don’t need to be a stock-picking guru. Here’s a simple game plan to get started:

1. Choose Low-Cost Funds: Opt for index mutual funds or exchange-traded funds (ETFs) that track broad international indices like the MSCI ACWI ex-USA. These give you instant diversification across thousands of companies.
2. Mix Developed and Emerging Markets: A total international stock fund covers both, balancing stability with growth potential.
3. Keep Fees Low: Look for funds with expense ratios below 0.2%. Every penny saved on fees is more money working for you.

Why funds? They’re like a buffet—you get a little bit of everything without the hassle of picking individual stocks. Plus, they’re less likely to give you heartburn if one company tanks. I’ve always appreciated the simplicity of ETFs; they’re easy to trade and often tax-efficient.

A total international stock fund is the easiest way to diversify globally without overcomplicating your strategy.

– Portfolio strategist

Avoiding Common Pitfalls

Here’s where things can go sideways. It’s tempting to chase the hottest markets—say, piling into Asian stocks because they’re on fire. But that’s a recipe for trouble. Narrowly focused funds are volatile, and timing the market is a fool’s errand. I learned this the hard way years ago when I got excited about a single region’s boom, only to watch it fizzle out.

Instead, stick to broad-based funds. They’re less sexy but far more reliable. Also, watch out for currency risks—fluctuations in exchange rates can affect your returns. And don’t forget taxes; international dividends might come with foreign tax withholding, so check how your funds handle that.

What’s Next for Global Markets?

Predicting markets is like reading tea leaves—nobody’s got a crystal ball. But there are signs that international stocks could keep shining. Emerging markets are riding waves of innovation and population growth, while developed markets benefit from stable institutions. Still, don’t bet the farm on short-term trends. The U.S. could bounce back, or global markets could cool off. That’s why diversification is your best friend.

Perhaps the most interesting aspect is how global investing forces you to think bigger. It’s not just about numbers; it’s about connecting with the world’s economic heartbeat. From tech startups in India to renewable energy in Europe, you’re tapping into stories of growth and resilience.

Final Thoughts: Is Now the Time?

So, should you buy international stocks? If your portfolio is all-in on the U.S., it’s probably time to branch out. But don’t go overboard—think of it like adding spices to a dish. A little goes a long way. Start with a broad, low-cost fund, set your allocation, and stick with it. Over time, you’ll thank yourself for building a portfolio that can weather any storm.

What do you think—ready to go global, or sticking with the home team? Either way, keep your eyes on the long game. Markets shift, but a diversified portfolio is like a good friend—always there when you need it.

Portfolio Diversification Model:
  60-80% U.S. Stocks
  20-40% International Stocks
  Rebalance Annually for Stability