Canada only makes up a small portion of the world’s stock markets
As individual countries and regions still contrast with one another, investing globally increases the diversification of your portfolio.
Graphic 8: Breakdown of the world’s stock markets
Source: Dimensional Fund Advisors, which is an investment advisor registered with the Securities and Exchange Commission.
Individual investors tend to invest largely within their home country.
This truth extends to Canadian, American, Austrian, Australian, Belgian or Danish investors. This preference is referred to as home bias.
Behavioral research suggests that our home country stocks seem less risky than those across our borders. However, we avoid home bias: Investing only in Canada forfeits roughly 92% of the diversification available to us.