* The below references an opinion and is for informational purposes only. Not meant to be investment advice. For investment advice, please contact a licensed professional.
WHY INVEST NOW?
It’s always a wise decision to make money work for you. But in times of crisis, successful investments can be a lifesaver. Investing, normally considered to be an alternative source of income or retirement funding, can mean emergency exit or survival plan. Having your money diversified, you decrease the risk of losing everything.
Of course, there is always another angle to any situation. As they say, every crisis is an opportunity. Joggling ever-changing gains with the risks involved, some people can even increase their earnings. Anyway, without further a due let’s look at the most viable ways to invest in 2022.
1. INDIVIDUAL STOCKS
In the “garage” of stock investing, individual growth stocks are the muscle cars. They claim high performance, meaning high investment returns. These stocks are often tech companies, but not necessarily. Growth stocks can be risky as investors are willing to pay a lot for them, referring to current companies' earnings. But when the “bear” trend comes individual stocks can lose their value rapidly. Their popularity suddenly vanishes. Nevertheless, the stocks of world’s tech giants – like Alphabets or Meta – are still considered to be some of the best long-term performers.
TOP 5 STOCKS TO BUY IN 2022
The beginning of 2022 brought investors caution and fear. Rapidly changing valuations shook Wall Street, making the stock market go through its worst times since March 2020. Keeping this in mind, here’s a take on the 10 best stocks to buy, according to US News.
Alphabet Inc. (ticker: GOOG, GOOGL)
You can hardly imagine how massive a company Alphabet (Google owner) is. Only its online video platform, YouTube, revenue in the fourth quarter of 2021 was $8.6 billion. And that's $1 billion more than Netflix Inc. (NFLX) in the same period. Cut a long story short, Alphabet's and its famous search engine is not going anywhere.
EOG Resources Inc. (EOG)
EOG Resources is a USA oil and natural gas provider. A very good option considering oil prices and ongoing inflation. EOG hasn't let us down, jumping 45% up as energy prices have skyrocketed and inflation is still going up with the consumer price index touching 40-year highs of 7.9% growth in February and 8.5% in March.
Microsoft Corp. (MSFT)
The monster of big tech – Microsoft – is next on the list. The financial power of its products such as Windows, Microsoft Office and Office 365 are undeniable, while the recent rise of its cloud software – Azure – saw revenue growth of 46%. Acquisition strategy of Microsoft – LinkedIn ($26.2 billion) and video game developer Activision Blizzard Inc ($69 billion) – speaks for itself.
Visa Inc. (V)
A credit card giant is one of the most impressive businesses in the world now. With 3.6 billion cards globally and more than 70 million selling points in their network Visa remains a rock-solid stock option. Experts expect their revenue to hit 19% growth in 2022.
Meta Platforms Inc. (FB)
Formerly known as Facebook, Meta Platforms is now the most competitive rival of Alphabet in the world of digital advertising. For 2022 and 2023 financial experts predict double-digit revenue growth.
More individual stocks to consider in 2022:
Medifast Inc. (MED), ASML Holding NV (ASML), Lowe's Cos. Inc. (LOW), Upstart Holdings Inc. (UPST), Grupo Aeroportuario del Sureste SAB de CV (ASR).
2. STOCK FUNDS
If you’re not the type of person to constantly check on an individual stocks’ situation, a stock fund – an ETF (Exchange Traded Funds) or a mutual fund – can be your best bet.
Don’t have much time or desire to dig deep into investment theme? Don’t worry, there are S&P 500 and Nasdaq-100 indexes funds to get you covered. Based on these indexes you will buy a broadly diversified and safer set of stocks than if you buy a few individual stocks. The main benefit of buying a stock fund is the safe average return of all the companies in the fund, so the fund will normally be less profitable but less risky than individual stocks.
3. ROBO-ADVISOR PORTFOLIO
Another great way to step into the investment game without too much hustle. Robo-advisor is a paid service (around 0.25 percent annually) that will invest your money automatically depending on your goals. After you fill in the questionnaire and set your time horizon and risk-tolerance, robo-advisor will search for adequate funds (normally low-cost ETFs) and build you a portfolio.
With somewhat lower overall return, robo-advisor can offer you a safe, stable and diversified portfolio. Which is already a good start. Among leading robo-advisors, you can look at Wealthfront and Betterment.
4. RENTAL HOUSING
A great type of investment if you dream of managing your own properties. Down to earth and practical – people will always need to live somewhere, right? It can work quite well for you if you find a good property, finance it and fill it with tenants. Over time by paying out your debt and increasing rent you will be able to build a solid cashflow.
Let’s talk about nuances and specifics:
- This is a real-life business where you can't buy and sell assets with the tap of a finger in your mobile app. Moreover, you can get the 2 a.m. call about a broken pipe from an angry tenant;
- It’s a long-term investment with a higher entry price and a heavy dependance on mortgage rates and overall realty market trends.
But if that doesn’t bother you can go ahead and start your housing investment adventure by finding a good real estate broker.
Cryptocurrency is a digital-only currency that is traded as a medium of exchange and is considered to be a “future money”.
So far 2022 has been tough for cryptocurrency, with most of the crypto coins massively declining in value. However, considering its highly volatile nature, cryptocurrency situation can always change bringing instant profit to a loyal holder.
In short, cryptocurrency is a high-risk investment with a chance of turning your savings to a complete zero but with a potential for higher returns. If you are up for it, you can buy it at any popular crypto exchange like Binance or Coinbase.
Historically precious metals (gold particularly as the most desirable one) are considered to be a solid investment in times of crisis and uncertainty. Due to geopolitical tension and inflation growth yellow metal is considered to give higher return in 2022.
Financial analytics noticed, that gold went to its 16-month high of $1,970 immediately after Russia attacked Ukraine. In the current economic and geopolitical circumstances, the gold prospective still looks promising and bullish.
You can buy digital gold (ETFs listed on the stock exchange) or invest in physical gold bar from a certified gold dealer or a bank.
Commodities are an extensive type of investment including but not limited to:
- Agricultural products (like corn, wheat, etc.);
- Energy resources (oil and natural gas);
- Raw materials (like lumber and iron).
The efficiency of a commodity investment is highly dependent on supply and demand. This is why they are more profitable during a supply chain disruption, like the blockade of Ukrainian grains and sunflower oil by Russian warfare.
Still commodities are quite risky – changing geopolitical situation, natural disasters or drought can dramatically affect your assets.
This is the reason you can prefer commodity-based ETFs and mutual funds on stock exchange over a tangible commodities deal.
IN A NUTSHELL
If you’ve decided to invest in 2022, you should double check your risk tolerance (how much risk can you take), time horizon (how soon you’ll need your money back) and your knowledge of investing. Typically, it’s a trade-off between risk and return. But if you want the sweet spot in the middle you may opt for lower-risk ETFs as a long-term investment made with the help of a professional broker.