Stocks: International Stocks

Do you have a yen for Japanese stocks? Think German stocks will hit the mark?

Forgive the corny joke, it's in the service of an important lesson on international investing: Buying foreign stocks can be a great way to diversify your portfolio and find great new opportunities, and buying foreign stocks has never been easier. But, there are important factors regarding risks and rewards to consider when investing overseas, a key one being currency.

An investor's return on a stock from a foreign country is tied to changes in currency values between the U.S. dollar and that country's currency. In short, if an investor buys a Polish stock, and the zloty (the Polish currency; using the yen as an example seems too obvious) rises against the dollar between the time your buy and sell the stock, your return is worth more. If the zloty weakens, the return weakens as well. ...