This article originally published in The Northern Daily Leader on 16 March 2013.
Augustine of Hippo, also known as St. Augustine, was a Christian philosopher and theologian who died over one and a half thousand years ago. Besides spending his time as a bishop in Algeria, Augustine was also known for his ability to coin a phrase. My favourite quote by Augustine was when he said “The world is a book and those who do not travel read only one page.” That’s probably a little unfair as many people cannot or simply do not want to travel, but it does convey the incredibly diverse people you can meet and amazing cultures you can experience while traveling, be it in your own country or overseas. I’ve been in the fortunate position to have done a fair amount of overseas travel when I was younger and before the baby-handbrake was applied, and I’ve always been thankful that those opportunities presented themselves. As a typical backpacker all of my travel was done on a shoestring budget, but a lack of money didn’t mean the experiences were any less richer. Whether it was drinking tea with a holy man on the banks of the river Ganges; getting lost in old Stone Town in Zanzibar; sipping snake whiskey on a slow boat down the Mekong; smoking cigars with Turkish gun smugglers or driving a taxi through the streets of Cairo, international travel in particular is one activity that is guaranteed to challenge your thinking and broaden your mind, as well as teach you a new appreciation for the country that you call home.
The diversity of life and cultures you will find during overseas travel has its implications for investing too. Including international exposure in your investment portfolio brings important diversification benefits, particularly when you consider that the Australian stock market makes up just 2.5% of the total value of all listed companies in the world. So if you restricted your investment selection to just Australian companies, you would be ignoring 97.5% of all other such opportunities in the rest of the world. That’s like deciding that you will only eat potatoes for breakfast, lunch and dinner, as you just couldn’t be bothered eating any of the other types of food out there. International investments can also act to improve the risk-adjusted return of your portfolio. As the Australian stock market does not move completely in sync with overseas markets, by including exposure to those markets you can reduce the volatility of your investments while still earning an appropriate return. International investing comes with risks too however, just as you would encounter in your home market. Do your research and make sure you know what you’re getting into; just as I should have done when that Indian holy man assured me that the tea was safe to drink.