We are a consumer driven economy and two thirds of our output is reflected by what consumers spend on their everyday items. Now that the world has become more connected, worldwide consumer demand for products of all shapes and sizes has risen to dramatic levels. It is quite obvious that demand from the growing middle class in developing countries will spur investment in these economies.
The middle class consumer in America is not spending as fast as his worldwide counterpart. In fact, the middle class in America is shrinking as the rich folks are getting richer and the poor are getting poorer. We should be doing everything in our power to spur growth in the American middle class by furthering our advancement in education and improving the crippling infrastructure on our own soil.
Emerging markets accounted for 12 trillion dollars in spending in 2010 and spending is expected to increase to 30 million by 2025, equaling roughly half of all output. As middle class families in these countries have more disposable income, they will spend more money on items such as healthcare or amusement items like alcohol or other related things.
You may want to consider having certain exposure to these international markets so you can capitalize on their potential earnings. A good quality balanced portfolio will have a percentage dedicated to international affairs. For some it may be 10%, others 30-50% or more. It all depends on your individual strategy and what your needs or desires are. My point is that you may want to consider some exposure to these markets to have an opportunity to work toward where you need to be financially. As with any investment strategy, please consult your qualified advisor to determine what is best for you.
(Source American Funds)
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Stuart Steinberg of Eaglerock Financial, Inc. has worked with families for more than 20 years, helping them work toward their financial goals through a holistic, well rounded approach rooted in objectivity, education, and empowerment. Stu is highly regarded by clients and colleagues for his unique combination of investment, CPA and entrepreneurial experience in the high net worth market.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. No strategy assures success or protects against loss. International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.