So often, we hear people say that you should buy a few Australian Blue Chip stocks and hold them long-term… Well, they’ve got it wrong!

Now, I’m not saying a ‘buy and hold’ strategy is necessarily bad. In fact, the way people will get their wealth is by saving and investing. But that’s another story. Here, I want to challenge the traditional stockbroking strategy of ‘buying a few Aussie shares.’

The Comfort of Australian Blue Chips

Investors (and their stockbrokers) tend to feel more comfortable investing in shares with which they are familiar. That is, Australian shares that are often household names like the big banks, big retailers, and big mining companies.

However, people forget that the Australian share market makes up only around 3% of the world’s shares. That’s right… only 3%! And yet they hold all their growth investments in one market, often in a handful of stocks dominated by a couple of sectors.

What this represents is a highly concentrated investment portfolio with a high level of risk—risk that is usually unrewarded.

What’s the Alternative?

A more prudent approach is to make sure that your portfolio has exposure to different shares in a variety of markets around the world. This can be done without taking additional risk because you’re no longer holding ‘all your eggs in one basket.’

There are some years in which Australian shares perform better than the share markets of many other countries around the world. But more often than not, it helps to have exposure to shares globally.

International Shares Are More Familiar Than You Think

It may also come as a surprise that the unfamiliar International Shares may not be so unfamiliar! A global portfolio will often include names such as HSBC, Exxon Mobil, Apple, Coca-Cola, Microsoft, Walt Disney, Volvo, and Samsung, to name a few.

Heard of them? In fact, you have probably used their products in the last week.

Broadening Your Exposure

So, if you look at your investment portfolio and all you see is a group of Australian company names, perhaps it’s time to enhance your investments by broadening your exposure to the globalised world we now live in.