Scary economy, real solutions

Solution: Buy foreign stock and bond funds

Full disclosure: These funds have soared over the past five years, and it's hard to imagine that they can continue to outperform in perpetuity.

Yet the fact of the matter is, most individual investors still have too little of their money in overseas equities. The non-dollar-denominated stocks and bonds that these funds hold will give you wide exposure to currencies and economies that may be on a stronger track than ours.

If so, you'll stand to make money both on the currency exchange and on the strength in the underlying investment. Conversely, if the dollar strengthens against the currencies represented in your fund's portfolio, you could take a loss even if the underlying stocks hold up fine.

How much money to put into overseas securities? Experts say a reasonable approach is to keep at least 20% of your stockholdings in a broad-based foreign-equity mutual fund and 20% of your bondholdings in an international bond portfolio. --George Mannes

NEXT: Falling stock market