What Should I Invest in Right Now?
The entire world seems knee-deep in economic turmoil. Forecasts by the British Chambers of Commerce (BCC) show the economy will plunge into recession before year-end. The BCC expects inflation to spike to 14%, the highest it’s ever been since the early 80s.
That means everything is going to be more expensive. While shelving investment plans seems the right move bearing the circumstances, the current environment presents tremendous investing opportunities to the keen observer.
That’s because the economy sometimes operates like a see-saw: some sectors might decline, boosting other sectors. For instance, while brick-and-mortar businesses suffered during the pandemic, online companies flourished. So, here’s a look at what you should be investing in now.
Figure out your Investment Objectives and Attitude Toward Risk
The first thing you should do is pit your investment objectives against risk tolerance. That is, determine how much investment risk you are willing to take regarding the amount and type of investment you choose.
Considering the current hostile market, it pays to focus on investments that will overcome short-term market volatility and potentially provide higher future returns, as spelled out below.
Stocks and Mutual Funds
The stock market is a potential recession-buster if you think long-term. Investing at such a time means you’ll purchase stocks at a low price, with a chance to sell at a higher price or earn dividends when the market regains its health.
Mutual funds are similar, only that investors pool their resources under a money manager who manages their investment portfolio in stocks, bonds, and other securities. These are excellent investment vehicles if you have the patience.
Personally I use Hargreaves Lansdown for my Investment ISA and Trading212 for my General Investment Account.
Real Estate
Real estate has always been a safe bet, whatever the economic environment. Property prices have increased since 2021, but the market seems set to reverse. House prices flat-lined between August and September, the first time since 2021.
That could signal a decline in home prices, which would be your cue to start investing in real estate. However, don’t expect quick returns considering the market.
Alternatively, try investing in real estate investment trusts (REITs), which grant you a share of a company that invests in income-producing real estate properties. You can even do this tax efficiently with an ISA with a platform like Hargreaves Lansdown.
Savings Accounts
Savings accounts are ideal if you’re risk-averse since the Financial Service Compensation Scheme (FSCS) protects your deposit. Further, your money will earn higher interest than if it were in a regular savings account.
Savings accounts could take the form of easy-access accounts or notice savings accounts. You could opt for a regular savings account if you want to top up your savings frequently.
If you don’t need the cash for a long time, try a fixed-rate savings account, which offers one of the highest interest rates.
Although the current economic downturn seems like the worst possible time for investors, there are plenty of investment opportunities if you look closely enough.
First, assess your needs, then match them to the best investment vehicles for your situation. Some of the best investments you could try include real estate, stocks and mutual funds, and savings accounts.
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