When you’re building an investment portfolio, it’s important to know what kind of investments you should be making to maximise your potential. Of course, it’s impossible to know which companies are going to be sound investments; these things change on a moment-to-moment basis, after all. However, using a mixture of informative sites like InterInvestor, knowledge gained through experience, and analysis of the market, you can determine what kinds of investments are sound. Here are the 10 best investment types you can put money into in 2022.
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1. Government bonds
Did you know that the UK has never defaulted on its debt? It’s true – the government has always managed to pay back its debts in a prompt fashion, and that’s why government bonds in the UK, as well as in several other places around the world, are very safe investments. You can pretty much guarantee that you’re going to get your money back and then some if you buy government bonds, so if you’re looking for a “sure thing” investment, government bonds are the closest you’ll get.
2. Stocks in solid companies
Companies like Disney and Amazon pretty much never fluctuate enough to be considered risky bets, so they’re solid options if you want a good investment. Shares can often command high prices, but there’s very little risk involved, making these companies good avenues to take, especially if you’ve never invested before. Of course, you don’t have to invest in mega-conglomerates; as long as the business has a stable history, it’s a good option for investment.
3. Savings accounts with a high yield
You’ve probably heard of high-yield savings accounts, which provide high rates of interest on money as long as you have your balance stored in that account. Despite a massive hit to the savings interest rate last year, you can still make around 5% on your savings if you know where to look, and given that there’s pretty much no risk involved here, you can also virtually guarantee that nothing bad is going to happen to your money. Everyone should consider opening a high-yield savings account.
4. Real estate
Unfortunately, a lot of real estate can be prohibitively expensive to get into. Property prices can be extremely high these days, which means that unless you’ve got some serious cash to invest, you might be priced out by higher spenders. However, real estate is almost always in demand, and the property market doesn’t fluctuate to anywhere near as much of a degree as other markets often do. As such, real estate is a strong option for a stable investment portfolio.
5. A pension scheme
If you want a decent pension, it’s a good idea to start saving as early into your working life as you possibly can. Many employers will ask you to join their pension scheme voluntarily, and doing so is a very good idea; it’ll stand you in good stead when you retire later on in life. Pensions are technically investments, and not only do they often have great rates of return, but they’re also a literal investment into your future and your later life.
It might not look like cryptocurrency is a particularly sound investment after the 2022 it’s had so far, but don’t let that fool you; this currency could still very well be the future. Although it has plummeted pretty far this year, currencies like Bitcoin were riding all-time high levels just a few months ago, so it’s no surprise that they’ve come down from those lofty heights. Bitcoin, Ethereum, and Litecoin are all cryptocurrencies that you should definitely watch in 2022.
7. Growth stocks
Growth stocks are pretty much exactly what they sound like: they’re stocks that are expected to grow at a much faster rate than the average for that particular market. Many growth stock companies are in the tech industry, as this is where the rate of innovation (and therefore growth, in many cases) tends to be highest.
If you haven’t heard of robo-advisors, allow us to blow your mind. In essence, a robo-advisor is an AI process that automatically invests the money you provide to it. You specify a number of parameters – risk acceptance, time horizon, personal goals, et cetera – and the robo-advisor finds the right investments based on what you’ve told it. This is a pretty safe investment because the AI won’t do anything you don’t explicitly instruct it to do, but it will help you to find the right places to invest your money.
9. Index funds
Unlike individual funds, index funds diversify your portfolio across a broad range of stocks. You may also have heard index funds referred to as mutual funds or ETFs, but whatever you call them, they’re a great option for you, especially if this will be your first adventure into the investing world. Index funds spread your investments across many different companies, which means that you won’t need to worry about your portfolio suddenly plummeting.
10. Small cap stocks
Small cap stocks are an interesting option. They’re perfect for investors who want to take a chance on smaller companies, which is often where the best growth opportunities can be found. Naturally, there’s a higher rate of failure among small cap companies, which are broadly defined as companies with less than $2 billion market capitalisation. Those companies could be about to skyrocket in terms of growth and value, though, so this is often where the big money gets made.