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How To Invest Small Amount Cleverly And Effectively
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Five experts reveal the opportunities they see around the world.

With a new president and a foggy outlook for his impact on the U.S. economy and others around the world, finding experienced, insightful sources of investment advice is more important then ever.

We’ve got that covered.
We asked five leading investors to share their best ideas on where to put $10,000 right now. Here, in the third installment of our series, we offer their strategies, plus a wealth of exchange-traded funds chosen by Bloomberg Intelligence ETF analyst Eric Balchunas to reflect the themes the investors highlight. (Some of our five panelists also run mutual funds or investment portfolios that employ their strategies and themes.) Favored tactics for the new year include shifting some money out of U.S stocks into international equities, making a contrarian bond play, prospecting for small-cap stocks in Asia, and more.
Before diving in, make sure you have a solid grasp of these basics of personal money management. Then you can focus on the opportunities our experts identify as likely to produce more than the measly interest rate on your emergency stash of cash, in the long run. You might want a home for all or part of a 2016 bonus, or an inheritance, or a business windfall, or that tax refund that may come your way in a few months.
What kind of returns did last quarter's proposals produce? Check out the results that follow each new entry below. For comparison, the Standard & Poor’s 500-stock index was up 3.2 percent for the three months ended Dec. 31. A click of the mouse lets you tab between this year's entry and those of the past two quarters.
If you’re following the seven rules of smart money management and have the basics of your financial life under control, you’re ready to consider these ideas:
Diversify Internationally

About six months ago, we discussed how underinvested most Americans are in emerging markets. Since then, we've seen a nice total return in the Vanguard FTSE Emerging Markets ETF (VWO) of 3.5 percent. (The past three months haven't been as kind, as noted in the ETF performance figures below.)
But it is not only the emerging markets that Americans tend to be underexposed to, but the developed international markets as well.
Blame home country bias. People are more comfortable in the companies and corporate management they are most familiar with. That tends to be the companies of their home country. This leads to significant overexposure to Canada or the United Kingdom or the United States, or wherever.
The problem with this is that it’s a big world. The U.S. accounts for about half of the world’s stock market capitalization and about 25 percent of its economic activity. Investing primarily in U.S. stocks dramatically reduces the benefits of diversification.
Not only that, but U.S. markets have been outperforming international markets for more than a decade. This outperformance is one of the reasons that stocks in the U.S. have a higher valuation than international or emerging-markets companies. Across five of the broadest metrics—CAPE ratio, price to earnings, price to cash flow, price to sales, and dividend yield—U.S. stocks currently have an average premium of more than 60 percent over European, Asian, and emerging-market stocks. Higher valuations and lower dividend yields means that U.S. stocks should have lower expected future returns than foreign stocks.

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