The Case for International Investing & The True ROI of Emergency Funds (SB1690)
Digest
This podcast episode delves into the world of international investing, starting with an overview of its current state and long-term performance compared to US investments. The hosts emphasize the importance of diversification to mitigate risk. They differentiate between developed and emerging markets, outlining the unique risks and rewards of each. Practical advice is given on choosing investment vehicles (ETFs, mutual funds, individual stocks), with a suggested starting point of a 50/50 US/international allocation, adjustable based on individual risk tolerance and financial goals. The episode also includes listener questions and answers regarding insurance deductibles (in relation to emergency fund size) and international investment strategies. A trivia segment and a TikTok minute on compounding interest are also featured. The podcast concludes with final thoughts and a call to action.
Outlines
Introduction, Sponsor Messages & International Investing Overview
The episode begins with sponsor messages followed by a discussion on the current state of international investing, highlighting its long-term outperformance and the benefits of diversification.
Developed vs. Emerging Markets & Investment Risks
A comparison of developed and emerging markets, outlining the specific risks (political, regulatory, currency) associated with each. The importance of broad market diversification is stressed.
Investment Vehicles, Portfolio Allocation & Listener Questions
Guidance on selecting investment vehicles for international exposure (active vs. passive management), a recommended starting allocation (50/50 US/international), and answers to listener questions about insurance deductibles and international investing strategies. Includes trivia and a TikTok minute on compounding interest.
Closing Thoughts and Call to Action
Final thoughts on international investing and a call to action.
Keywords
International Investing
Investing in securities and assets from countries outside one's own. Offers diversification and potential higher returns, but also carries increased risk.
Diversification
Spreading investments across different asset classes and geographies to reduce risk. Reduces the impact of poor performance in any single investment.
Emerging Markets
Countries with developing economies showing high growth potential. Offer higher risk and potential reward compared to developed markets.
Developed Markets
Countries with established economies and stable political systems. Generally considered less risky than emerging markets, but with lower potential returns.
Portfolio Allocation
The distribution of investments across different asset classes within an investment portfolio. Determined by risk tolerance and financial goals.
Risk Mitigation
Strategies to reduce the potential for losses in investments. Diversification and appropriate asset allocation are key strategies.
Compounding Interest
Earning interest on both the principal amount and accumulated interest. A key driver of long-term investment growth.
Emergency Fund
Savings set aside to cover unexpected expenses. Size depends on individual circumstances and risk tolerance.
Deductibles
The amount an insured person pays out-of-pocket before insurance coverage begins. Higher deductibles typically result in lower premiums.
Q&A
What are the benefits of international investing?
International investing offers diversification, potentially higher returns, and risk mitigation by reducing correlation with domestic markets. However, it also involves higher risks.
How do I choose the right amount to invest internationally?
There's no single right answer. Start with a 50/50 or 60/40 US/international split and adjust based on your risk tolerance, financial goals, and time horizon. Consider your need for return and the level of volatility you can tolerate.
What are the risks associated with international investing?
Political instability, regulatory differences, currency fluctuations, and information asymmetry are key risks. Diversification across developed and emerging markets can help mitigate these risks.
How can I incorporate international investments into my portfolio?
Use ETFs, mutual funds, or individual stocks (though this is riskier). Consider active vs. passive management strategies. A passive approach is generally recommended for beginners due to its simplicity and lower costs.
How should I set my insurance deductibles?
Lower deductibles offer more protection but higher premiums. Higher deductibles lower premiums but increase your out-of-pocket risk. The optimal level depends on your emergency fund size and risk tolerance. A larger emergency fund allows for higher deductibles.
Show Notes
How global is your portfolio, really? This week in the basement, Joe Saul-Sehy, OG, and the gang zoom out from the U.S. markets and take us on a whirlwind trip around the investing world. Spoiler alert: the case for international investing is stronger than you think—and it’s not just about chasing higher returns. It’s about risk reduction, smart diversification, and maybe even admitting that the U.S. isn’t always the world’s MVP.
You'll hear how developed and emerging markets fit into a well-balanced portfolio, how correlation works in your favor (yes, this time that’s a good thing), and what history tells us about going global. Joe and OG share practical advice for how to get started, when to rebalance, and how much international exposure might make sense for the average Stacker.
Then in the second half, we pivot from markets to money buffers: listener Jeff from Cleveland wonders how to set insurance deductibles based on the state of his emergency fund. We break down how to think about the real return on your rainy-day stash—because spoiler: it’s not about the interest rate, it's about your resilience.
To wrap things up, we share timeless wisdom from Stackers across the country on what they’d tell new graduates about money, life, and how not to blow that first paycheck on a jet ski.
Why international investing may improve both your returns and your risk profile
How much of your portfolio to allocate internationally—and what history suggests
What "correlation" really means and why it’s your friend (at least in investing)
Risks and common misconceptions of investing overseas
How to choose between developed vs. emerging markets
Portfolio tools to visualize your asset mix and expected outcomes
Why your emergency fund’s best ROI might be peace of mind
How to align insurance deductibles with your liquidity cushion
What our community of Stackers wishes they had known after graduation
FULL SHOW NOTES: https://stackingbenjamins.com/making-the-case-for-international-investing-1690
Deeper dives with curated links, topics, and discussions are in our newsletter, The 201, available at https://www.stackingbenjamins.com/201
Enjoy!
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