retirement funds: domestic or foreign?

[feh]

Hi folks.

I've got a small amount of money I'm going to invest, probably in the next few days. It's retirement money - probably won't be needed for at least 15 years.

I'll be putting it into a mutual fund; likely an index fund of some sort. My question is - would domestic stocks or foreign stocks be the better place to put it?

Thanks!

[Broken Arrow]

What does the rest of your portfolio look like? We need to know that before we can help you further.

Still, all things being equal, what about a Target Retirement fund? They will automatically invest your money in domestic and foreign investments at the same time.

[disneysteve]

I agree with BA. We can't answer the question without knowing the big picture. Do you have an asset allocation that you are working with? If so (and you should) than just stick with that. If you are under-invested in foreign stocks based on your desired allocation, then add this money to that. If you already have enough in foreign stocks, put this money in what ever area is lacking.

[feh]

What does the rest of your portfolio look like? We need to know that before we can help you further.

Still, all things being equal, what about a Target Retirement fund? They will automatically invest your money in domestic and foreign investments at the same time.

This is a small amount of money - only 2 or 3% of our total portfolio, so I'm not concerned with how it affects overall allocation.

I was just wondering, in general, which category is viewed as the better purchase today?

[Broken Arrow]

Well, I would stick this money wherever it serves to fully diversify your holdings in a way that reflects your risk tolerance and target horizon. So, just whatever the % allocation is for the rest of your portfolio.

OR, if what you are saying is that you are already diversified, that you want to be a bit more adventurous with this 2 to 3% money, and you're looking for a decent fund to buy into, well, look no further than our own domestic stock market!

At this point, you can pick almost anything. Except maybe financial sector. That's high risk enough that I can't recommend a sector-level buy in that just yet. But anything else is good for mid to long term horizons. Tech, energy, basic materials, healthcare, and some non-cyclical consumer goods just off the top of my head. Plenty of good buys out there.

However, if this really is "mad money" for you, I do recommend to stay away from foreign markets, mostly because they are much harder to valuate and track (at least for me). I don't want to recommend something I don't feel comfortable with.

[jIM_Ohio]

Both- a sound retirement plan holds both foreign and domestic stocks, large and small companies and there is more detail than this which goes into the decision.