It’s been a year since COVID-19 has made many countries economically challenged. With all the aggressive market fluctuations, many people are becoming more aware of how necessary it is for them to diversify their portfolios. As the pandemic clearly demonstrates how a stable economy can quickly turn upside down (check it out), both saving and investing for your future have been more important than ever.
Some people may choose to invest in the stock market to get a brief period of stability by making short-term investments in the market. However, given that the markets are expected to reach all-time highs well into 2021, it is essential to plan for a long-term investment.
There are a plethora of options available on the market, and knowing where to put your money is critical. You should know how to do them, either choose the level of risk you’re willing to take or choose the least risky among them all. Or you can do a little bit of everything and diversify your wealth across several different investments or assets in your portfolio.
Here we’ve listed some of the best investment options you should consider!
1. Real Estate
In many ways, real estate is considered one of the best long-term investments. Despite the economic downturns, this investment made a once-in-a-lifetime opportunity for many investors to take advantage of the real estate market this 2021. Over the last few years, we have witnessed an abundance of undervalued properties and massive financial liquidity— creating the ideal time for real estate investing, which has continued to this day.
In fact, the real estate market already reached its highest level of annual growth before the housing bubble burst in 2007 with the total U.S. home sales of 6.76 million units, the National Association of Realtors (NAR) says.
Not only is real estate steadily increasing in value when you actively manage it, but it also can be the best investment to earn a passive income through rentals. You’ll be able to enjoy cash flow while maintaining greater stability.
2. Precious Metals IRAs
Owning a precious metal IRA would be highly beneficial during times of economic uncertainty. Due to the market’s stable growth for precious metals such as gold, silver, palladium, and other approved metals, many investors and business owners are considering precious metals as a means of diversifying their portfolios. When there is an inflation event, they are not directly affected, and their value continues to hold for a long time.
But these precious metals aren’t particularly useful for generating income compared to other investments. Instead, when a financial crisis strikes, they are well-suited for preserving wealth. Typically, you will require the services of a custodian to store your belongings for you, ensuring that they are kept safe.
Choosing a reputable company to do transactions with is also essential when making an individual retirement account. On www.yahoo.com, you can check to see if they’re legitimate dealers, and you can connect with them. In addition, it would be a hassle to purchase physical coins or bars for most precious metals IRAs because these metals are rare, so having a dealer would make things easier for you.
If you want to invest but aren’t ready to take on the potential risks with more risky investments, bonds may be the best option.
Bonds are loans that you make to a corporation or a government entity. In exchange for your purchase of a bond, you are granting the bond issuer permission to borrow your money and remit it to you with interest.
Bonds are generally regarded as being less risky than stocks in terms of investment return. They provide a consistent cash flow as well as a fixed income. Thus, having a well-diversified bond portfolio can provide you with predictable returns with less volatility. With that said, it has a better yield than any other money market fund. However, because of this, bonds typically provide lower returns than stocks.
Stock funds are known for generating the highest returns, and as a result, they are the most sought-after investment. It is a type of mutual fund that invests in stocks or shares of a company. Primarily, it is intended to generate capital appreciation for your benefit as an investor.
In addition, this can be managed in two ways: active or passive.
If you want to be active, you have to research the market, learn about the company, analyze how the shares go, and invest in the best stocks available. But if you don’t want to put in the time and effort to research and analyze individual stocks, you can still invest in stocks. You’ll be having a fund manager to do all work for you until you get maximized returns.
On the negative side, however, is that it is a highly volatile investment. Given that it is frequently influenced by market fluctuations, it is only effective for investors willing to accept some risk to maximize their capital appreciation.