Investing in the current economy can come with a lot of unique opportunities. One thing it doesn’t possess, though, is a high degree of stability.
It’s difficult to find much confidence when investors are facing things like inflation, cooling markets, and a red-hot housing market.
As the world grapples with one post-pandemic economic crisis after another, investors must find a way to grow their wealth, or they’ll fall behind. Sitting on cash isn’t an option when inflation is running rampant. Growth stocks have suffered an epic crash in recent months. Cryptocurrency is in an icy winter of its own.
If you’re an investor looking for financially stable investments in the current economy, here are a few ideas to get you moving in the right direction.
1. Pivot Rather Than Pull
Before discussing specific investments, it’s important to address one’s mindset. A market downturn is a tempting time to pull your investments. If you withdraw your wealth at the bottom of a dip, though, you’ll be fiscally punished for the move. Even pulling out part way into a drop can be disastrous if you don’t time things just right.
Instead, adopt two important mental filters. First, unless you’re a day trader, try to make calculated, long-term investments and then leave them alone when you’re feeling emotional.
Second, if you feel a certain investment was a bad idea, look for ways to pivot your strategy rather than abandon it altogether to stay financially stable.
As an example, cryptocurrencies have completely deflated in the first half of 2022. Rather than cut your losses, look for viable pivot opportunities. For instance, Red Swan CRE, a tokenized real estate marketplace, provides an investment option allowing consumers to invest in commercial real estate with cryptocurrency.
The marriage of traditional dependability with innovative potential is a solid choice for anyone looking to batten down the hatches with their crypto holdings.
2. Shift From Growth to Value Stocks
Growth stocks were all the rage during the bounce-back recovery early in the pandemic. Unpredictable options, especially in the tech sector, were fan favorites for investors everywhere.
2022 has been brutal on growth stocks so far, and the rising threat of inflation is causing many to shift away from the growth stocks that rewarded them so well in the past. Instead, many are opting for value stocks.
These are simply stocks that are trading at a cheap value when compared to things like short-term earnings and the potential for long-term growth. Stocks like these tend to weather inflationary periods better. They belong to companies that are well-known entities, can raise prices easier, and maintain value.
3. Find Safety With Other Traditional & Financially Stable Investments
Along with value stocks, there are many other areas of the economy that attract investor dollars during turbulent, inflation-prone times.
One example is Treasury inflation-protected securities. These operate like other fixed income investments with one important distinction. They adjust their principal amount if and when inflation becomes a factor.
Real estate (via tokenized real estate as well as traditional financing options) also remains a tried and true investment choice. Even with the current seller’s market making it difficult to find a deal, investing in real estate still comes with a certain sense of stability. No matter what happens, an investor can rest assured that their property will retain at least a portion of its value in the short term — and will likely increase that value if given enough time, as well.
Other traditional investments often touted during unstable times include things like commodities, gold, and even cryptocurrency. However, these investments can be volatile. Always purchase them within reason (see tip 5).
4. Be Financially Stable by Embrace Dollar-Cost Averaging
If you’re uncertain how to continue to invest fresh funds in a market that is constantly swinging in both positive and negative directions, you’re not alone. Fortunately, a strategy like dollar-cost averaging (DCA) can help you reinstate a sense of stability, no matter where the market goes on a weekly and even a daily basis.
DCA is simpler than it sounds. In a nutshell, dollar-cost averaging simply consists of investing the same amount of money into something on a consistent basis, no matter what the current price may be.
Embracing DCA is a great way to spread out your investments and avoid any sudden or steep losses over time.
5. Always Invest Money You Can Afford to Lose
As a final recommendation, remember the oft-repeated advice to only invest money that you can afford to lose. Everything in this article (and most others like it on the internet) focuses on thoughts, resources, and suggestions. These are helpful, but they aren’t foolproof.
As soon as you decide to try a certain strategy, you’re rolling the metaphorical dice. The choice could bring financial stability to your portfolio …or a sudden twist in financial fate could lead to a loss the next day. This stuff just isn’t something you can predict.
That’s why it’s important to do your homework to reduce your risks. Then work to build your wealth with money you can afford to lose. Don’t gamble. Invest.
That way, no matter what market conditions you find yourself in, you can always make thoughtful, sound, emotion-free decisions that minimize risk and give you plenty of stability both now and in the future.
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