How Much Foreign Portfolio Allocation is Too Much?

“Peace, commerce, and honest friendship with all nations…entangling alliances with none”Thomas Jefferson

David Loeper‘s recent article asks what percent of your investments should be dedicated to non-United States companies.  I get this question often when speaking with my clients.  On the surface it seems intuitive.  Well, is it?

Here is the quick answer quoted from Loeper’s article.

“So, with optimal reduction in uncertainty falling at somewhere between 10-20% in foreign equity exposure, we choose to allocate 15% of our equity exposure to foreign stocks.”

To read the supporting ideas behind Loeper’s research, follow the link. http://www.forbes.com/sites/advisor/2012/04/11/how-much-foreign-portfolio-allocation-is-too-much/

So, let us expand the question and ask how much of your portfolio should you dedicate to stocks?  Now, that question requires time with your planning advisor.  As always, the quick answer is that we wish to take the least amount of risk necessary to reach the goals you desire.  There is no text book answer for this question because no text book is written for your specific reality.

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About Christopher Hessenflow

Christopher Hessenflow is a financial planner in the Chicago area. He works with all sorts of people who are much more interesting than he is. He enjoys his career which lends him time to think and, sometimes, be creative. Chip was born bald.
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