The adage goes, “Change is the only constant in life.” This word of wisdom can be one of the more applicable statements in investing. Specifically, investments may comprise impressive portfolios but may not always be profitable.
Your investment’s value can fluctuate over time. If you don’t consider this, you might be disappointed about signing up for a particular product. It’s also important to note that if you plan to sell your assets shortly, you have to consider how their potential changes in value will affect your portfolio.
Here’s a look at some investment decisions you might want to consider to secure your profit and assets as the new year dawns.
The year 2023 is shaping to be a redemption year for undervalued sectors in recent years. These industries include financial technology, energy infrastructure, advertising, mining, and cybersecurity.
Unfortunately, there’s also concern that 2023 could begin a recession. A recession would have severe implications for all sectors of the economy, including those performing well. Market downturns preceded the last instance of a recession, which most experts anticipate will materialize starting in 2023.
It’s important to remember economic models dictate these initial projections, which can’t account for all variables in the market at any given time. Many factors are at play and could drastically alter the trajectory of the investment market as the future approaches.
The investment market in 2023 is a mixed bag, with a projected recession coming while forecasting specific sectors to bounce back from the adverse effects of the COVID-19 global health crisis for the past two years.
Despite the uncertainties surrounding 2023’s investment market, these smart investments can still help you survive and even thrive in what’s projected as an unpredictable year. Here are some opportunities you should consider while developing your investment planning strategies.
A bond is a financial instrument that a government, corporation, or other entities issue to holders with paid interests until the bond matures. Many experts view bonds as one of the safest because they typically have low investment risk, including the risk of default.
Smart investors should invest in bonds in 2023 because they’re fairly priced, tend to increase significantly, and can offer capital gains. In addition, the bond market is slowly rising from the pandemic’s effects and will likely continue to perform well in 2023 and beyond.
High-yield savings accounts are the best way to invest in the short term and are one of the safest investments for 2023. They offer a higher interest rate than traditional savings accounts that you can use to improve your overall financial situation.
Savings accounts with high yields can help you grow your money and make more of it. A higher interest rate means you’ll have more financial resources in the long term, allowing you to make regular deposits to your savings.
Your savings will also grow faster than in a traditional account, giving you more capability when making a significant purchase or increasing your investment stakes. Another advantage a high-yielding savings account brings is it can serve as a source of immediate cash if you need it.
A certificate of deposit (CD) is an investment account you can open at a bank, credit union, or brokerage firm. The money you deposit into the CD is held for a particular duration—usually three (3) months to five (5) years—to earn interest.
CDs are excellent investments in 2023 because it’s FDIC-insured, so you don’t have to worry about losing your deposit if the bank goes under. Moreover, CDs are federally regulated, which means they come with higher consumer protection than other investments.
Value stocks have a lower price-to-book ratio, which entails trading at a discount compared to their book value. The lower the price-to-book ratio, the better deal you’re getting on your investment.
A healthy and growing company will generally have a higher stock price because there’s more demand for its stock; this means it’s worth more and can sell for more.
In 2023, value stocks will be a good investment because many companies remain undervalued due to the economy recovering. You can buy them at a discount and wait for them to grow. This way, you’ll get back more than what you invested.
Cryptocurrency is a digital currency that uses cryptography to secure transactions and control the creation of new units. You can use cryptocurrency as a means of payment for goods and services or as an asset to trade on exchanges for other currencies.
Also known as digital currency, it may be good to consider cryptocurrency as an asset class. Like gold or oil, cryptocurrencies do not require any tangible or physical form; they are purely digital representations of value, which makes them unique investments.
Cryptocurrencies offer several benefits over traditional money, like no inflation risk due to their finite supply, no transaction fees paid to intermediaries, and increased privacy.
Investing in cryptocurrency is a good idea because it can grow exponentially over time, especially given its low barrier to entry and lack of regulation in many countries worldwide.
Real estate will be an excellent investment in 2023 for many reasons. First, the housing market has seen a spike in demand, which means many opportunities to make money by investing in real estate. Real estate may be the right choice if you’re looking for a way to diversify your investments and add more stability to your portfolio.
There are many more pros to investing in real estate today. However, one of the most significant benefits is that there’s plenty of room for growth in the market. If you’re looking for a prime investment endeavor, consider the housing market, be a real estate investor today, and reap all the benefits the opportunity offers.
The investment market in 2023 will be full of highs and lows, considering predictions that it will be a “bounce back” year for many struggling sectors but with a recession possibly starting as the same year opens. You can never be “too ready” when safeguarding your valuable investments. Consider these tips to give you peace of mind and added security regarding your assets.
Darrell Armuth founded Sensible in 1994. Since then, he has served hundreds of clients. Darrell is a Certified Public Accountant certified by the state of Nevada.
Sensible’s mission is to provide a better investment experience for today’s investors. We deliver really good investment advice to real people at a low cost, allowing you to earn more while paying less.
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Originally published January 12, 2023