Free Wealth Management Guide Building An Effectively Diversified Investment Por | Page 10

Portfolio Five

January 1970 - December 2012
Annualized
Return

Annualized
Standard
Deviation

Growth of
$100,000

Portfolio One
Portfolio Two
Portfolio Three

8.5%
8.4%
8.7%

11.6%
11.0%

$3,281,865
$3,249,085

10.4%

$3,678,586

Portfolio Four
Portfolio Five

9.0%
9.9%

10.8%
11.6%

$4,071,094
$5,681,785

U.S.
MicroCap
12%
U.S. LV
12%
U.S. SV
12%

REITs
12%

Short/Int. Bonds
40%

S&P 500
12%

Portfolio Six (adding international and emerging
market companies)

Investors often tend to invest in what they know and
are comfortable with. Consequently, many investors
concentrate their portfolio holdings in the United
States. While it may feel more secure to invest in
your own country, you are missing out on potential
opportunities by limiting your investing to the U.S.
Just as we know concentration in one company or
industry can be risky, the same applies to investing in
just one country.
Our world is changing quickly. In 1970, the United States accounted for 66% of all publicly traded
stocks. In 2013, that percentage is around 40%.
By the year 2050, it is estimated that the U.S will
account for only 17% of all publicly traded stocks. (3)
This is not because the U.S. economy is not growing
or will not continue to grow, it is because international markets will be growing faster.
As you can see in the chart to the right titled: Ranking of Markets Around the World. From January
1, 2000 through December 31, 2010. The United
States ranked 39th out of 45 countries in terms of
annualized returns in U.S. dollars.

10