The ongoing war in Ukraine, the ongoing problem with access to cheap raw materials, the apogee of the trade war between the United States and China, the subject of global inflation marking the end of the long-standing policy of cheap money, and supply chains still broken as a result of the pandemic – all this has caused the global capital market to virtually come to a standstill. This was particularly painful after a long period of constant climbing of indices to new peaks.
What investments to choose, what to invest money in?
Choosing the right investments depends on a number of factors, such as your risk profile, time horizon, and financial goals. It’s important to diversify your investments – don’t focus everything on one option. Consider different types of investments: stocks, bonds, mutual funds, real estate. Each of them has its own unique features and potential profits, but also risks. It is important to constantly educate yourself about the different forms of investing, keep track of the market, and make informed decisions. Remember, investing is a long-term game – don’t look for quick profits.
In the second half of the year, only the owners of some debt funds could feel some satisfaction. At the same time, it was a very moderate satisfaction, because the rate of return reached half the inflation rate at best.
In 2023, even those instruments – gold for example – that have always been considered a good investment for difficult, crisis times behaved unpredictably. This time they performed relatively worse, and various types of lesser-known and common financial instruments gave dramatic results.
Cryptocurrencies outside the spectrum of interest
A flagship example here can be cryptocurrencies, considered by many to be a miraculous vehicle for the new times. In 2021, when the value of cryptocurrencies skyrocketed, more than half of Britons declared that they would prefer to invest in “digital money” instead of stocks. That momentary delight began to evaporate this year, and the collapse of FTX, one of the largest cryptocurrency exchanges, stripped people of all illusions. This year, a gigantic amount of $2 trillion has evaporated from the crypto market and the question remains whether this market will survive at all.
Will the fear of recession materialize?
At the end of the year, the situation began to stabilize. Inflation dynamics in the United States have started to slow down and the belief among investors that the FED, the US central bank, will be able to deal with inflation in 2024 is slowly returning. However, it is still unknown whether the world will be able to avoid a recession, and if this recession does come, what its depth will be and how long it will last. For now, the forecasts are contradictory, but the surveys of sentiment among entrepreneurs do not give a very optimistic picture.
Where and what to invest money in?
Therefore, it is necessary to act carefully, bet on those funds whose managers very carefully select companies, bet on those entities that have good cash flow, financial reserves, solid business and a good competitive situation. And wait carefully watching the market, because many signals seem to indicate that in 2024 stocks will start to return to favor after all.
Investing money can yield significant returns, but choosing the right channels is key. Stocks are a good place to invest, especially in the stock market, but be aware of the risks associated with market fluctuations. Treasury and corporate bonds are a safe choice, offering fixed returns. Mutual funds or real estate are long-term investments that can provide a stable income. Also consider alternative investments, such as gold or art. It is important to always diversify your investments and align them with your risk profile.
How to invest money?
We repeat that today it is more difficult than ever to answer this question. Each instrument and strategy has its own strengths and weaknesses. Every investment is also associated with risk.
Investing money is crucial for building a stable financial future. The beginning is always the same: set your financial goals and the level of risk you’re willing to accept. Next, learn about the different forms of investment.
- Stocks are a good option for those who are looking for potentially high returns and can accept a certain level of risk. Stock investments involve the purchase of a share in a particular company, and profits are generated from the increasing value of these shares or dividends.
- Bonds are a safer choice, offering fixed returns in exchange for lending money to the bond issuer. These are usually governments or corporations.
- Mutual funds allow you to diversify your investments by combining different assets, such as stocks, bonds, and more, into one package.
- Real estate, both commercial and residential, is also a good long-term investment, giving the potential for a steady rental income or profit from subsequent sales.
Remember that investing is a long-term game. The longer you invest, the higher the chances of profits. Therefore, it is important to start as early as possible.