It makes sense to have a certain level of familiarity with the securities we put in our portfolio. But just investing in familiar securities and products can blind us to other options that might benefit us.
In this episode, Mark Riepe explores the “home bias”—or the tendency to invest in stocks from one’s home country—with Schwab’s Chief Global Investment Strategist Jeffrey Kleintop. They discuss how global companies often have a similar footprint, how some countries act as proxies for certain sectors, and ways to avoid the home bias.
Next, Mark speaks with Cooper Howard, managing director for fixed income strategy at the Schwab Center for Financial Research. Cooper and Mark discuss how investors tend to over-invest in municipal bonds from their home state, or from bond issuers with which they are familiar. This is a tricky bias in the muni market because there are some tax incentives to invest in munis from one’s home state. Cooper also explains some often-misunderstood characteristics of muni bonds and the bond markets.
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Important Disclosures:
The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
Investing involves risk including loss of principal.
Diversification and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.
Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. For more information on indexes please see www.schwab.com/indexdefinitions ( .
Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.
International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.
All corporate names are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.
Currencies are speculative, very volatile and are not suitable for all investors.
Tax-exempt bonds are not necessarily a suitable investment for all persons. Information related to a security’s tax-exempt status (federal and in-state) is obtained from third-parties and Schwab does not guarantee its accuracy. Tax-exempt income may be subject to the Alternative Minimum Tax (AMT). Capital appreciation from bond funds and discounted bonds may be subject to state or local taxes. Capital gains are not exempt from federal income tax.
Commodity-related products carry a high level of risk and are not suitable for all investors. Commodity-related products may be extremely volatile, illiquid and can be significantly affected by underlying commodity prices, world events, import controls, worldwide competition, government regulations, and economic conditions.
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