[Gigi3000]

Do you buy CDs or Treasury equivalents in any
foreign countries? We can include mutual funds too.

[retiredguy123]

Originally Posted by Gigi3000

Do you buy CDs or Treasury equivalents in any
foreign countries? We can include mutual funds too.

I don't. Foreign bonds are not insured or backed by the U.S. Government. They are not "equivalent".

[manaboutown]

I own two dividend oriented international ETFs, IQDG and EUDG. They comprise only a small percentage of my portfolio.

Back in the late 1970s, very early 1980s a colleague at work spent a lot of time in a small town a good ways down on the west coast of Mexico. He converted a substantial amount of his savings into pesos and deposited them into a CD or similar savings instrument in a Mexican bank as they were paying a very high interest rate, maybe 18 - 22%. Then the peso devaluations started. The bank would not return his money as he had time deposits. His losses were terrible.

Oh, the town is San Blas. It was a small fishing village back then. San Blas Mexico | Hotels, Beaches, Nature, Things to Do

[Gigi3000]

Originally Posted by manaboutown

I own two dividend oriented international ETFs, IQDG and EUDG. They comprise only a small percentage of my portfolio.

Back in the late 1970s, very early 1980s a colleague at work spent a lot of time in a small town a good ways down on the west coast of Mexico. He converted a substantial amount of his savings into pesos and deposited them into a CD or similar savings instrument in a Mexican bank as they were paying a very high interest rate, maybe 18 - 22%. Then the peso devaluations started. The bank would not return his money as he had time deposits. His losses were terrible.

This is my fear in the states. I feel there's an elephant in the room and everyone is in denial.

[manaboutown]

Originally Posted by Gigi3000

This is my fear in the states. I feel there's an elephant in the room and everyone is in denial.

Times are scary when even Swiss banks get into trouble! Exclusive-Qatar fund explored claims against Switzerland for Credit Suisse losses

[coralway]

Originally Posted by Gigi3000

Do you buy CDs or Treasury equivalents in any
foreign countries? We can include mutual funds too.

nope - only a couple of Canadian stocks that trade on the TO exchange.

[petsetc]

Originally Posted by Gigi3000

... We can include mutual funds too.

Since ~2005, we have maintained about 40% international (mutual funds) in the equity portion of our investments believing that if 50% of the world economy is not in USA then opportunity exists elsewhere too. It has fared well for us.

A good starting place to look at potential mix(es) is paulmerriman.com who recommends some equity mixes under his portfolios>mutual funds.

[retiredguy123]

Originally Posted by petsetc

Since ~2005, we have maintained about 40% international (mutual funds) in the equity portion of our investments believing that if 50% of the world economy is not in USA then opportunity exists elsewhere too. It has fared well for us.

A good starting place to look at potential mix(es) is paulmerriman.com who recommends some equity mixes under his portfolios>mutual funds.

I don't know what you mean by fared well, but Vanguard has an international stock index fund, a total stock market index fund (US stocks), and an S&P 500 stock index fund. Over the past 10 years, here is how they have performed on an average annual basis:

International fund, 4.43 percent
Total stock fund, 11.68 percent
S&P 500 fund, 12.20 percent

Also, the international fund has a risk rating of 5, but the two U.S. stock funds have a risk rating of 4. I think I will stick with U.S. stocks.

[spinner1001]

Originally Posted by Gigi3000

Do you buy CDs or Treasury equivalents in any
foreign countries? We can include mutual funds too.

No, I don’t. There’s no free lunch.

If you want to invest that way chasing higher interest rates in other countries, you might consider that country interest rates are associated with country inflation rates. Higher inflation rate —> Higher interest rates. (If you want to read about it, look up Fisher’s equation on interest.)

Why does this matter? If you buy a foreign debt instrument in their local currency such as pesos, you are exposed to currency exchange risk — future currency depreciation against the US dollar. A country with higher inflation will likely have its currency depreciate against the dollar that shows up in exchange rates. (This does not apply if you buy a foreign bond denominated in US dollars.) For instance, if you buy a foreign one-year CD paying 10% interest, you must first convert your dollars into the foreign currency at today’s exchange rate. In one year, you have earned 10% interest from the foreign bank. If you want your money back in US dollars in one year, you must convert your foreign money using the currency exchange rate at that time. If the foreign currency depreciated 15% against the dollar, you have lost money. You earned 10% in interest and lost 15% in the currency exchange.

International investing: Inflation rates, interest rates, and currency exchange rates are linked together. In addition to exchange risk, you may be exposed to default risk.

Take a look at the government bonds paying higher interest rates at the link below. These high-interest countries generally have higher inflation rates or higher default risk or both.

10-year government bond yield by country 2023 | Statista

Moral of the story: There is no such thing as a free lunch of higher interest rates without accepting higher risk.

[CoachKandSportsguy]

If you buy foreign stocks or bonds or other financial interests, you are exposed to CURRENCY fluctuations. .
and unless you BUY at the top of the US DOLLAR strength, and you SELL at the bottom of the US DOLLAR weakness, you are generally going to lose with an 8% currency cost for conversion. .

good luck

[spinner1001]

Originally Posted by retiredguy123

I don't know what you mean by fared well, but Vanguard has an international stock index fund, a total stock market index fund (US stocks), and an S&P 500 stock index fund. Over the past 10 years, here is how they have performed on an average annual basis:

International fund, 4.43 percent
Total stock fund, 11.68 percent
S&P 500 fund, 12.20 percent

Also, the international fund has a risk rating of 5, but the two U.S. stock funds have a risk rating of 4. I think I will stick with U.S. stocks.

Investing in foreign stocks is different than investing in foreign debt instruments. Investing in foreign equities is generally wise for portfolio diversification reasons IF your investment horizon is longer. If your horizon is shorter and investing in foreign equities, be very careful.

[CoachKandSportsguy]

Originally Posted by spinner1001

Investing in foreign stocks is different than investing in foreign debt instruments. Investing in foreign equities is generally wise for portfolio diversification reasons IF your investment horizon is longer. If your horizon is shorter and investing in foreign equities, be very careful.

in reality, its not really needed as the SP50 revenue has a very large portion of intl revenues and costs from world leading global companies.

The intl funds end up being riskier tiered companies, so you are diversifying by adding a lower quality set of companies. .

[retiredguy123]

I suspect that a lot of people own international stocks and/or bonds because they were recommended by a financial advisor. If you are paying an advisor to invest your money, I would recommend that you compare your total return to the S&P 500 index and total bond index least once per year. An honest advisor should do this for you. If the advisor is not getting a higher return than the indexes, then you are paying the advisor for nothing. Fire the advisor and buy some Vanguard index funds.

[manaboutown]

Many of the S&P 500 are in fact international companies as they both manufacture and sell in foreign countries so investing in a S&P 500 index fund gives one international exposure.

Years ago after a trip to New Zealand I bought a few shares of a telecommunications company down there, SPKKY. It has been no great shakes but pays a decent dividend so I have kept it. New Zealand income taxes are withheld from the dividends paid to me. I imagine foreign taxes are due and likely withheld on interest paid on bonds as well as stock dividends.

[Ecuadog]

Originally Posted by CoachKandSportsguy

If you buy foreign stocks or bonds or other financial interests, you are exposed to CURRENCY fluctuations...

What about countries that use the US dollar as their official currency?