In today’s interconnected world, the idea of limiting investments to your home country is becoming increasingly outdated. As certified financial planner Warren Ingram explains, diversifying your investments across the globe can offer significant advantages and mitigate risks associated with concentrating all your assets in one economy.

Imagine you’re a man on the moon, looking at Earth from a distance. From this vantage point, you can objectively assess the world’s largest economies and stock markets. This perspective allows you to allocate your money more effectively, rather than putting all your eggs in one basket.

Warren emphasizes the importance of being agnostic to your home market and focusing on major global economies and markets. While it’s essential to have some investments in your home country to cover local expenses, the bulk of your capital should be allocated according to global trends.

One practical way to achieve this is through index funds. These funds offer a simple and cost-effective method to invest in a diversified portfolio that mirrors the global stock market. The All Country World Index, for example, includes stocks from every country in the world, weighted according to their market value. This approach ensures your investments are spread across various economies, reducing the risk of significant losses.

Warren highlights the advantages of keeping things simple. Index funds are easy to monitor, low-cost, and provide a clear understanding of what you’re buying. He advises paying close attention to the costs associated with your investments, as high fees can erode your returns over time. Look for options with a total investment charge of around 0.1% to 0.3% per annum for index funds, and no more than 0.5% to 1% per annum for actively managed funds.

In conclusion, diversifying your investments globally can help you achieve financial freedom and protect your assets from localized economic downturns. By leveraging low-cost index funds and being mindful of investment fees, you can build a robust and resilient portfolio that stands the test of time. Tune in to our latest episode to hear more from Warren Ingram on how to navigate the world of international investing and make informed decisions for your financial future.