Investing is one of the best ways of securing one’s financial future. And investing over the long term is considered the best way to invest. It’s a great way to set yourself up with college tuition savings, a down payment fund, or a retirement fund. It’s simple – the longer the time your cash has to grow, the less you need to invest.
Table of Contents
- Why Invest?
- Long-Term Investing: The Essential Rules
- The Best Investment Options in 2022
- Investors are Careful in 2022
- Conclusion: What to Invest in Right Now
And the question is – what to invest in right now? ETFs? Mutual funds? Real estate? Today, investors are given so many options to invest and the ability to choose the level of risk they’re willing to take.
We know how tempting it may be to chase quick returns and move away from the long-term approach. But today’s market is experiencing high valuations, so it’s critical to invest for the long haul. Investments outpace inflation and all you should do is choose the right investment strategy.
Why Invest?
By investing, you grow your wealth that will keep you out of financial trouble, fund your college or retirement, and provide another source of income. Ultimately, it increases your buying power and helps you meet financial goals over time.
In addition to building wealth, as an investor, you will want to balance the risk with the potential gains involved. In order to do so, you should build an emergency fund, keep debt at manageable levels, and develop the ability to ride out the dynamic market without accessing your funds.
There are so many investment strategies out there and you should do some research to find out what to invest in right now. For example, there are high-risk options (stock index funds), medium-risk options (corporate funds), and the safest ones (money market accounts and certificates of deposit).
With so many options laid in front of you, you can easily find some that fit your risk profile and offer a wonderful variety of returns. Furthermore, you can combine different investment strategies to create a diversified and well-rounded portfolio.
Long-Term Investing: The Essential Rules
It is important to keep the following rules in mind to secure your path to a bright future with long-term investing.
1. Understand all the risks involved
When it comes to investing, you need to take on more risk if you want a higher return. In other words, investing in high-risk stocks will make you more money, while safer investments (e.g., certificates of deposit) will provide low yields.
Let’s take stocks, for example. They boast a pretty strong record as a whole (returning 10% over longer periods) and are also well known for their volatility. They can fluctuate 50% (either up or down) within a year, so if you’re looking for a safer bet, going with short-term investments is a better deal.
2. Choose strategies that work for you and stick with them
It all depends on your personal risk tolerance. If you go with high-risk strategies, would you be able to withstand the pressure and not panic if your investment starts dwindling fast? And when it’s down, you will want to avoid selling it, especially if there’s still potential to go back up. Selling your investment for pennies and seeing it continue to rise even higher can be quite demoralizing.
Be sure to pick an investment strategy and understand it inside and out because, even if it falls out of favor, it will give you a better chance of sticking with it. There is no bulletproof investment strategy that works every time, so it’s best to stick to a plan and focus on the long term.
3. Diversify, diversify, diversify
Because there is no such thing as a 100% secure investment, it’s important to diversify your investment portfolio. One way to easily diversify your investments is index funds because they allow investors to invest in several companies grouped according to geography or size.
You can build a diversified portfolio quickly by owning such funds, and it will earn you solid returns over the long term and come with less risk. What to invest in right now? Well, it doesn’t need to be only one thing. You can go with different real estate investment strategies, as well as precious metals, company stocks, and crypto.
Related: What Are the Best Real Estate Investment Strategies for Beginner Investors?
4. Understand your time limits
The longer your investment hold period, the more time there is to ride all the ups and downs of the market. And committing to holding your investments longer is a way to lower the risk. The S&P 500 index’s track record is quite good. However, the returns came over longer periods of time.
Over short periods, it can be substantially down, so investors who intend to put their money into the market should be ready to keep it there for 3-5 years. If it is not an option for you, high-yield savings accounts (or other short-term investments) may be a better strategy.
When it comes to investing, if you don’t perceive time as your ally, it can be hard to know what to invest in right now.
The Best Investment Options in 2022
The most reliable long-term investments are designed to build steady and slow gains over a longer period of time. If you’re still wondering what to invest in right now, here are some of the top 2022 long-term investment strategies to consider.
1. Blue Chip Stocks
If you’re thinking about what are the best stocks to invest in right now, we will say blue chip stocks. Blue chip stocks are actually shares of the most well-known, large companies, such as Apple, Amazon, Disney, Google, etc.
Their stocks are considered to be safe, reliable, and able to stand against any economic fall over the long term. Because the blue chip stocks’ proven track record, owning them can contribute with reliability and stability to your investment portfolio.
In case you hold a total market or S&P 500 index fund, you already own blue chip stocks. An Exchange-Traded Fund (ETF) or blue chips index fund is one of the best ways to start investing in them. One of the most popular blue chip funds is the Average ETF Trust, because of its low fees.
2. Small-Cap Stocks
Short for small market capitalization, small-cap is equal to an enterprise’s share price times the number of shares outstanding. When a company’s market cap falls above $300 million and under $2 billion, it gets classified as a small-cap stock.
Russell 2000 index is one of the most popular small-cap index funds. It tracks 2,000 small-cap enterprises across different industries, but nobody guarantees that a small business will survive (even if it demonstrates an outstanding initial performance).
And what are the best small-cap companies to invest in right now? We would go with Salesforce, Veeva Systems, Adobe, Tyler Technologies, ServiceNow, EOG Resources, and Microsoft. If you’re not sure what to invest in right now, they are some companies that you can’t go wrong with.
3. Index Funds
Index funds or ETFs come with low expense fees and are diversified, which is why they are so attractive to investors. The best place to start is an S&P 500 index fund because it tracks the top 500 enterprises on the stock market.
Compared to choosing individual stocks, index funds are a safer strategy because they broaden your choice over dozens or even hundreds of companies. Such a strategy is perfect for those with little interest or time to sift through individual stocks.
Some index funds are more diversified, others are based on specific industries, but, in general, there are several to choose from. For example, you can purchase a mutual fund that closes at the end of each stock market day or an ETF, which works like a normal stock with fluctuations during the day.
Because of lower minimums and costs, EFTs present an easier entry point for beginner investors.
4. Real Estate or REITs
Real estate is, in many ways, the prototypical long-term investment and if you’re thinking about what to invest in right now, an investment property in the right location is a no-brainer.
Why is real estate such an attractive investment and are investors attracted to the housing market 2022? First of all, it does come with some upfront costs (fees for closing and down payment), renovation costs, and ongoing costs that may be unexpected. They include vacancies (if you decide to rent), dealing with tenants, repairs, and maintenance.
However, you don’t need to use your own money to invest but borrow some from the bank and pay it back over time. Since interest rates are low, REITs are a popular investment option for those who want to own property and be their own boss.
Being a passive investment, you will need to find the best place to buy rental property, purchase the property, and engage in some property management. That is if you want to make money by renting out the property.
If you possess the knowledge and willingness to manage a property, rental housing should be your next move. But before you decide to buy a property, you need to perform thorough research and find something with a high return on investment potential.
Related: Top 10 Cities for Buy and Hold Real Estate to Invest in Right Now
Key Considerations
To pursue the real estate investing route, you will need to:
- Do your market research. When looking for the right property, you should conduct a neighborhood analysis first. What will determine your property’s rental investment potential is its location. Factors like good schools, hospitals, parks, public transportation, shopping malls, etc. improve the chances of attracting tenants and setting higher prices. Be sure to inform yourself about the housing market 2022 and its future projections when scanning the best Airbnb investment locations.
- Conduct rental property analysis. The rental property analysis part depends on whether you want to operate a traditional rental or an Airbnb business. There are a variety of digital platforms that can help you calculate important metrics like median property price, cap rate, cash flow, cash on cash return, etc. Also, the said step involves looking at the properties’ characteristics – square footage, number of floors, number of bathrooms and bedrooms, and proximity to local amenities.
- Real estate comps. A real estate comp is any home similar or comparable to the one you’re thinking of investing in. They should be found in the same neighborhood and be similar in age, size, number of bathrooms and bedrooms, and features.
- Choose a rental business strategy. Deciding on a strategy is especially important for short-term rental owners. After performing an Airbnb analysis, you will need to decide on the pricing, rules, and regulations, and think about upfront and ongoing expenses.
- Arrange financing.
After making a smart purchase, you can make money by renting out the property. Hold your asset over time and, eventually, you will enjoy a solid cash flow by the time of your retirement.
Investing in a REIT is an attractive option for real estate investors looking for passive income.
5. Dividend Stocks
What makes dividend stocks one of the best kinds of investments for 2022 are the payouts. Namely, dividends are small sums of cash paid to shareholders out of an enterprise’s profits as a reward for owning stocks. They are excellent short-term investments that let you earn some money, but they also benefit you in the long term because of the rise in share price.
But don’t get too comfortable, because dividends also carry their own risks. It’s true that they’re often considered safer than non-dividend-paying or growth stocks, but not every enterprise that pays a dividend is worth your effort.
Be sure to look around for dividend stocks with a solid history of regularly increasing and paying their dividends. When looking for what to invest in right now and you decide on dividend stocks, you can consider buying dividend-focused, well-diversified mutual funds and ETFs.
6. Cryptocurrency
Around 2009, nobody thought that cryptocurrency would become so widely accepted. It’s a type of a digital currency that acts as a medium of exchange. During the last few years, owning cryptocurrency became quite popular when money started flowing into the asset and pushing prices up.
The most widely accepted crypto is Bitcoin and its price fluctuates a lot. For example, at the start of 2020, its price was below $10,000. Just a year later, the price topped around $30,000, then jumped to $60,000, before plummeting back. In June 2022, the price fell below $20,000, the first time it happened in the current decade.
Nevertheless, investors are flooding the new space, which draws more investment and speculation. Other coins reached their all-time highs and made many people rich. To begin investing in crypto, you should first do your homework and understand how they function. The coins are worth only what traders are ready to pay for it and are not backed by the value of an underlying company or by FDIC insurance.
For those with no idea what is the best cryptocurrency to invest in right now, focus your attention to:
- Ethereum (ETH)
- Bitcoin (BTC)
- Binance Coin (BNB)
- Polygon (MATIC)
- Decentraland (MANA)
- Maker (MKR)
- Cosmos (ATOM)
- Solana (SOL)
- Uniswap (UNI)
- Cardano (ADA)
If you are a risk-seeking investor who is ready to either see your investment go high up or plummet to zero, then cryptocurrency is a topic to think about. But if you’re looking for a safer environment, you should move along and keep thinking about what to invest in right now.
7. Commodities
Besides crypto, investing in commodities is another way of making money in a volatile economy. It is a broad investment category that includes:
- Natural gas and oil
- Precious metals
- Raw materials (e.g., iron and lumber)
- Agricultural products (e.g., grains and beef)
What determines the price of a particular commodity are usually the supply and demand. Investors are largely focused on metals, and what is the best metal to invest in right now? First and foremost, gold will definitely steal the show in 2022. Besides gold, magnesium, aluminum, and lithium are where you should be putting your money this year.
Investors Are Careful in 2022
There are some concerns circulating among investors due to the stock market’s rough start in 2022. According to CNBC, the S&P 500 Index is down about 13% year to date, sparking worry in many investors.
About 43% of 1,000 adults that participated in the Allianz Life’s Quarterly Market Perceptions March study said that they are nervous to invest in the stock market. Compared to the last quarter, that is almost a 10% increase – 81% of them expect volatility to continue, while more than 50% worry that there might be a stock market or housing market crash.
When it comes to money and finances, people just don’t like uncertainty, but that’s all that they’ve experienced so far this year. However, financial advisors and experts advise people to continue to invest money, especially those with long-term plans and horizons. Investing is an essential element of building wealth.
Related: The Top 5 Real Estate Investing Websites for Making Money in 2022
Conclusion: What to Invest in Right Now
What is the best thing to invest in right now? Company stocks? Gold and lithium? Cryptocurrency? Or maybe real estate? It all depends on your time horizon and whether you’re up for a bit of risk or not.
Any of the above strategies is good for building wealth over time, it’s just a matter of which one you’re most comfortable and acquainted with. There’s a range of options available, which means that you will need to understand the advantages and disadvantages of every option out there. To make the most informed decision, you need to determine how they fit into your overall financial plan.
Historically speaking, real estate is the safest and most profitable investment in the long term, way ahead of mutual funds, stocks, bonds, or gold.
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