Money Saving Tip: International Investing

Before I get started on my latest money saving/making tip, let me start off by saying that I am not an investment guru. My advice to anyone that does not have significant time to devote to following the investment markets is to hire a professional money manager/advisor to work with. I've tried to manage my own investments and, even with an above average education in all things financial, can't do nearly as good a job as my financial advisor does. That said, what I'm going to discuss is a concept that you can take and discuss with your financial advisor - as they tend to listen to all of your ideas and either validate them or tell you why they're bad ideas given your current state of affairs.

Now that my caveat is out of the way, I want to mention an idea that I've been thinking about for quite a while and have actually seen articles about in recent days. It seems like all we're hearing about these days is the flagging US economy, how we're sliding toward recession, how the dollar's hitting all-time lows, etc. Those things are, for the most part, true. The dollar is down this year against 15 of the 16 major trading currencies (all except the Mexican Peso) and some countries are actively seeking to reduce their holdings in dollars to limit their exposure to the fluctuations we're seeing in our economy. As an investor, the question everyone seems to be asking is this - what can I do to weather this storm and not take a beating?

My answer - buy stocks of companies that derive a majority of their profits overseas. Think about it this way - many economies are doing quite well as our economy suffers. Europe, Latin America, and Asia are all seeing growth while we're seeing declines. If you invest in a company that derives a majority of its profits in those markets, you could actually get a double win - you get the growth that the company experiences in those hot markets AND you get the benefit of the exchange rate as the company takes the profits made in foreign currency and trades that currency for the weak US dollar! Remember - we're talking about companies based in the U.S. that make most of their money elsewhere. Those are the ones that will be seeking to bring their profits back to the U.S. and will need to trade back into dollars.

How do you find companies that fit this profile? Believe it or not, a ton of big name US companies derive a majority of profits overseas. Consider the following list:

• Intel - 85% of profits from overseas
• Coca-Cola - 71% of profits from overseas
• Texas Instruments - 87% of profits from overseas
• Exxon - 69% of profits from overseas

These are household names we're talking here. Next time you talk to your financial advisor (or if, God forbid, you're managing your own money), consider parking some dollars in companies that are making their money outside the U.S. You may be glad you did!