Computerized Investing > July/August 2008

On the Internet: International Investments

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Investors who want to diversify their holdings often look abroad for international investments. Foreign investments can range from direct currency speculation to traditional bond and stock investments. However, direct investment in foreign-traded stocks can be difficult and costly for the individual investor. The easy choice is internationally focused mutual funds or exchange-traded funds. But those give you little control over which stocks, industries or countries you end up investing in.

For total control over your foreign investments you can invest in American depositary receipts (ADRs), which are negotiable certificates issued by U.S. banks that represent a specified number of shares in a foreign stock. These securities are denominated in U.S. dollars and are traded on a U.S. exchange.

You can also invest directly in foreign stocks by accessing foreign exchanges. This is much more complicated than buying ADRs since it typically requires making transactions in foreign currencies.

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