As we step further into the future, financial planning has become a key norm among domestic households. Moreover, millennials are becoming more finance-conscious and hence, investment strategies are on the verge of exploding. Today, not only adults but teenagers also seeking out numerous investment strategies to proliferate their monetary assets. In this blog, we will discuss the top 5 investment strategies that you should follow in 2022. Our list of investment strategies will help you make wise investments while also helping you boost your finance.
However, before we proceed with our list of strategies let us understand why it is vital to make investments.
Why you should be making financial investments?
To enjoy a comfortable financial future, investing is absolutely essential for most people. Investing your money can help you generate another source of income besides your primary source. Moreover, it will help you fund your retirement or even pull you out of a financial crisis. Above all, investing grows your wealth. It helps you meet your financial goals and increase your purchasing power over time. For instance, in case you have recently sold one of your assets, investing that money can turn out to be a wise decision for your future and present self.
While investing can build wealth, you will also want to balance potential gains with the risk involved. And you will want to be in a financial position to do so, meaning you’ll need manageable debt levels, have an adequate emergency fund and be able to ride out the ups and downs of the market without needing to access your money.
How can you invest your money?
There are several ways in which you can invest. There are a plethora of options available in the market—from safe choices such as CDs and money market accounts to medium-risk options such as corporate bonds or even stock index funds. Moreover, you can find investments that offer a variety of returns and are also suitable for your risk profile. This means that you can combine investments to create a well-rounded and diversified (which is safer) portfolio. You can also refer to our list of some of the best investment strategies which modern investors are currently following.
Top 5 Investment Strategies to follow right now
Below is a list of top investment strategies that you should definitely follow in 2022:
1. High-yield savings accounts
A high-yield online savings account pays you interest on your cash balance. With fewer overhead costs, you can typically earn much higher interest rates at online banks. Plus, you can typically access the money by quickly transferring it to your primary bank or maybe even via an ATM. A savings account is a good vehicle for those who need to access cash in the near future.
2. Short-term certificates of deposit
Certificates of deposit, or CDs, are issued by banks and generally offer a higher interest rate than savings accounts. These may be better options when you expect rates to rise, allowing you to reinvest at higher rates when the CD matures. They are federally insured time deposits and have specific maturity dates that can range from several weeks to several years. Since they are “time deposits,” you cannot withdraw the money for a specified period of time without penalty.
With a CD, the financial institution pays you interest at regular intervals. Once it matures, you get your original principal back plus any accrued interest. It pays to shop around online for the best rates. Because of their safety and higher payouts, CDs can be a good choice for retirees who don’t need immediate income and are able to lock up their money for a little bit.
3. Short-term government bond funds
Government bond funds are mutual funds or ETFs that invest in debt securities issued by the U.S. government and its agencies. Like short-term CDs, short-term government bond funds don’t expose you to many risks if interest rates rise, as they’re expected to do in 2022.
The funds invest in U.S. government debt and mortgage-backed securities issued by government-sponsored enterprises such as Fannie Mae and Freddie Mac. These government bond funds are well-suited for low-risk investors. These funds can also be a good choice for beginning investors and those looking for cash flow.
4. Rental Housing
Rental housing can be a great investment if you have the willingness to manage your own properties. And with mortgage rates still near all-time lows, it could be a great time to finance the purchase of a new property, though the unstable economy may make it harder to actually run it.
To pursue this route, you’ll have to select the right property, finance it or buy it outright, maintain it and deal with tenants. You can do very well if you make smart purchases. However, you won’t enjoy the ease of buying and selling your assets in the stock market with a click or a tap on your internet-enabled device. Worse, you might have to endure the occasional 3 a.m. call about a broken pipe. But if you hold your assets over time, gradually pay down debt and grow your rents, you’ll likely have a powerful cash flow when it comes time to retire.
Cryptocurrency is a kind of digital electronic-only currency that is intended to act as a medium of exchange. It has become a hot property in the last few years in particular, as dollars have flown into the asset, pushing up prices and drawing even more traders to the action.
Bitcoin is the most widely available cryptocurrency, and its price fluctuates a lot, attracting many traders. For example, from a price below $10,000 a coin at the start of 2020, Bitcoin soared to around $30,000 at the start of 2021. Then it doubled above the $60,000 mark, before falling back.
But the start of 2022 was rough for cryptocurrency, as traders increasingly sold their positions and most of the top cryptos declined sharply. However, many cryptocurrencies such as Bitcoin are coming off all-time highs, and it’s not that unusual for them to fluctuate markedly before eventually rising further. Those who bought and held may still be sitting on some pretty nice gains, despite these ups and downs.
This concludes our list of some of the trending investment strategies at the present time. However, besides the above-listed investment strategies, there are several other options that you can consider. For example, some other investment strategies can include Short-term government bond funds, Series I bonds, Short-term corporate bond funds, Value stock funds and many more.