Investing in stocks of foreign companies offers many advantages including diversification benefits, lower correlations with home markets, etc. However investors must focus on the long-term returns of overseas investments and not try to time the markets or trade often looking to make higher returns in the short-term.

The chart below shows the annual total returns of foreign stocks during each of the past 25 years compared with the 25-year average annual total return (13.1%):

Source: Standard & Poor’s. Foreign stocks are represented by the calendar-year returns of the MSCI EAFE Index. Returns shown include dividends reinvested.

In the short-term, as the chart shows there is high volatility in international investing. However over the long-term such as 25 years investors are nicely rewarded with a double-digit return.

Related ETF:
iShares MSCI EAFE Index Fund (EFA)

Disclosure: No Positions