Want a broad-based investment tip? Find out where the wealthy put their money and put yours there too.

Take, for example, the private banking clients of JPMorgan. A Private Banking "client" is a Wall Street euphemism for "rich." JP Morgan is telling its wealthy private banking clients to invest in emerging market equities and currencies such as the Indonesian rupiah and Indian rupee.

The Indonesian rupiah may be a bit of stretch for average investor's risk tolerance but the point we're making is that if you want to rebuild your shattered investment portfolio in this lifetime you're probably going to have to look overseas for any decent return. The U.S. markets are still climbing out of a "lost decade" and are now only back to where they were ten years ago. They're stuck in what financial experts call a "trading range," and there's no telling when they'll break out of it.

Emerging markets outperform U.S. markets

Emerging and frontier markets on the other hand are skyrocketing. Russia was up 129% last year and Sri Lanka had a year-to-date gain of 92% as of September 24 according to the MSCI, Inc. frontier index. Many American investors already invest in overseas markets just by buying shares of multinational companies. These days, three of the world's top five companies are headquartered in emerging markets and ten of the top 20 mutual funds invest in developing nations.

Consider this. According to Ibbotson Associates research, if you had invested $10,000 in the S&P 500 ten years ago, it would be worth only about $9,800 today. But if you had put the same amount in an international stock portfolio split between emerging and developed markets, your investment would have nearly doubled.

Still, on average, American investors have about 90 percent of their portfolio in U.S. securities.

We have to get used to the idea that the U.S. is no longer the global economic power it once was. A weak dollar coupled with a slow economy has put a serious drag on market performance. Moreover, emerging markets represent more than 70% of the world's population or four times that of developed markets and countries like India and China are seeing a surge in middle class consumerism.

Where's the real risk?

Jerome Booth is the head of research at Ashmore Investment, a UK-based emerging market fund. He's quoted in The Wall Street Journal as saying "people used to think emerging markets were far riskier than developed markets. But the credit crunch has shown that western markets are just as risky, and just as exposed to risks like weak corporate governance and political interference."

That doesn't mean there isn't risk in foreign markets, especially in what are known as "frontier" markets in Africa, the Middle East and the former Soviet Union, where you run the risk of political instability and corruption, where bribery is a normal business expense. There are also potential economic challenges such as China slowing its growth to avoid inflation or debt-ridden European nations cutting spending to the point they slide back into a recession.

Volatility abounds in some of these markets, but over time many of them have grown while the U.S. market, which has its own struggles with volatility, hasn't grown nearly as much. The key with global investing is to think long term.

A recent nationwide survey of mass affluent investors by Allianz Global Investors (AGI) and GfK Roper Public Affairs and Corporate Communications found that most (71%) are looking for the best investment they can find and don't care whether it is foreign or domestic. The survey, which was conducted in August, found only 42% said they were confident they'll reach their long-term financial goals compared to 53% in April and nearly two-thirds (63%) believe a major stock market downturn is at least somewhat likely in the next year, compared to 53% in April.

Investing in the right foreign markets

Investing correctly, in the right foreign markets, could make the difference between a meager performance and a solid one. Try to find a trusted financial advisor who will recommend the appropriate allocation and then the best balance of investment vehicles—mutual funds, ETFs, foreign securities, or shares of U.S. companies with global operations. Some financial advisors are recommending clients allocate between 20 and 35% in emerging markets and even more if the client is younger. That may be a little extreme for older and more conservative clients, but they would also benefit from having some of their portfolio in foreign stocks, even if it's just five or ten percent.

So now that you're at least thinking about investing in other markets, how do you go about doing that? Again, talk to a financial advisor. Ask them what kind of international investments are available and right for you.

Stock Funds

One of the best ways to enter foreign markets is through mutual funds and Exchange Traded Funds or ETFs. Not all foreign stock funds perform the same way and may not give the robust returns you'd expect. Some international funds are overly invested in large European or Japanese companies and have little exposure to the fast-growing emerging markets. On the other hand, relying too much on those red hot developing markets like Brazil, India and China can expose your portfolio to more risk than your tolerance can handle.

You also have a choice between global funds or an international or foreign fund. A global fund can invest anywhere in the world and depends on where the fund's management team sees the best opportunities. Many global funds will have holdings in the U.S. as well as overseas which means you'll get the broadest possible diversification available in a single investment. An international fund, however, invests only outside the U.S. and therefore is likely to be more volatile.

As with domestic funds, you want to be aware of sales charges. If you're seeking low cost alternatives, you may want to invest in an overseas index fund or ETF (exchange-traded fund). These investments offer some of the same advantages as a mutual fund, but have significantly lower costs because they are not actively managed.

Foreign Stocks

More sophisticated investors may want to consider foreign equities. Just as one of the basic principles of successful investing is diversification by spreading your investments across different industries, investing beyond borders is merely an extension of that principle.

The underlying concept is that you're taking advantage of the superior growth of other countries and there are two primary ways to do this with stocks. You can either invest in companies located in other countries or in U.S. companies that do business internationally and derive much of their revenue from overseas. In fact, investing in companies like Apple, GE, and Avon, who do business in nearly every country on the planet, is about as global as you can get in terms of taking advantage of the world's economies.

Another option for investing in international stocks is to buy an American Depositary Receipt, or an ADR. These are shares of a foreign stock held by a U.S. bank. ADRs are traded on U.S. stock exchanges and allow U.S. investors to buy foreign stocks without having to deal with foreign currencies, the expense of opening an additional account or higher commissions, and foreign banks, not to mention other possible barriers such as language and different time zones. Any gains and losses will appear on a 1099 form that you will receive at the end of the year.

Foreign Bonds

Older investors, who prefer the more conservative fixed income investments, may want to look at emerging market bonds. Take Brazil for example. Its debt to gross domestic product ratio is lower than that of the U.S. and Brazil's 10-year local currency bonds yield 12.3 percent, compared with 3 percent for U.S. Treasuries.

The key to foreign investing is to not try it alone. If you're going to invest in foreign markets, work with a financial advisor who understands the risks, rewards and complexities of the global marketplace.