You wouldn’t be human as an investor if you haven’t at least considered international investing in recent months. With the U.S. dollar declining sharply, domestic economic growth slowing, and new worries about tariffs and trade disruptions, overseas markets may hold more promise than they have in years.

So — does it make sense to invest in international stocks, especially given the headwinds here at home?

Before diving in, let’s clarify what we mean. For today’s purposes, international investing refers to owning mutual funds, ETFs, or individual stocks that focus on companies based outside the U.S., but which you can buy through U.S. brokerage platforms. It does not mean opening a foreign account or transferring assets abroad. That route often comes with complex reporting requirements, and most U.S. investors are better off staying within our robust market for low-cost, globally diversified investments.

Three decades ago, it was difficult to find accessible and inexpensive international stock options. Today, they’re widely available in both brokerage accounts and retirement plans. Many investors already own international stocks without realizing it — most target-date retirement funds, for instance, allocate a portion to international equities and sometimes international bonds.

International exposure has paid off so far this year. As of the end of April, the U.S. stock market was down about 5%, while developed overseas markets were up roughly 11%, creating a striking 16% performance gap in just four months.

That gap follows a decade of U.S. dominance. From 2014 to 2023, U.S. stocks returned an average of 12.4% per year, compared to just 5.5% for developed international markets. That difference compounds significantly. Over 10 years, the U.S. investor would have nearly double the account value of the international investor in a tax-advantaged account. That could mean the difference between retiring now or working several more years.

So why bother with international investing at all?

If you look at how major asset managers design target-date retirement funds, many allocate between one-third and one-half of their stock investments internationally. While I can’t speak for those managers, there are good reasons to follow a similar approach.

First, international stocks represent roughly 40% of global equity market value. Owning only U.S. stocks means you’re ignoring a major part of the global economy. Next, diversification: international and U.S. markets don’t move in perfect sync. Spreading your investments across both can help reduce risk over time.

Then there’s valuation. On average, U.S. stocks trade at higher price-to-earnings ratios than their overseas counterparts. That’s not necessarily unjustified — U.S. firms have been more profitable and innovative — but it suggests less room for upside. Finally, consider history. While the last decade favored U.S. stocks, there have been prior 10-year periods when international stocks outperformed significantly.

If you’re inclined to invest internationally, consider allocating 25% to 40% of your stock portfolio to those markets. But whatever you do, don’t chase returns based on the last four months. Make a thoughtful, long-term decision. Write it down in your investment policy statement. Then stick to it unless you have a compelling, well-reasoned argument to make a change.

Markets are unpredictable. Hunches come and go. But long-term discipline is one of the few reliable advantages the individual investor can control.

David Gardner is a certified financial planner and is admitted to practice before the IRS. He recently retired from an independent investment advisory firm in Boulder County and continues to write about financial topics. As financial planning is only possible after knowing the client, the column is not intended to be personal financial or tax advice. Data presented is believed to be accurate at the time of writing.