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I recently receive this question from a reader:

I’ve been seeing the term BRIC pop up. What does it mean?

If you read about the global economy, and about investing, chances are that you have seen this term. BRIC is an acronym that lumps together four emerging market economies that are supposed to take us into the next phase of global economic growth. Jim O’Neill, a Goldman Sachs economist, came up with the term to make it easier to talk about Brazil, Russia, India and China.  O’Neill believed in 2001 that the BRIC nations would overcome the six largest Western countries in terms of economic clout by 2041. That prediction has been revised to 2032.

With Western countries like the U.K. and U.S. seeing increasingly large deficits as they import more of their goods, export fewer goods and borrow more money to pay for the things demanded by their people, while BRIC nations see growth in exports, it doesn’t take much imagination to think that these emerging markets really will overtake. China alone is poised to become the next superpower.

Before you get excited about investing in emerging markets, though, remember that they are still considered risky. It is also important to remember that some of these countries have political situations that could get out of hand quickly (although most of the BRIC nations are mostly stable). It is also worth noting that some catastrophe could come along and change everything around. And the volatility is something you would have to be able to stomach.

However, BRIC nations do offer interesting investment opportunities, and if you can handle it, including some emerging market investments in your portfolio might not be a bad thing in terms of adding a growth element.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.