Many individuals took financial hits in 2022. Gas prices rose to unforeseen levels, and inflation was out of hand. The Ukraine War and supply and demand issues left over from the pandemic continued to wreak havoc on our wallets.
Now a new year is here, and with it comes a time for change. Despite ongoing inflation, you can still prosper if you make the right investment moves. This article will provide guidance on what you should be investing in to thrive in 2023.
Prepare for a Bear Market
The stock market has been characterized as a bear market, an ongoing trend since 2020. While stocks are currently not in bear status (20% or more down from their recent high), we are still looking at a downturn. Bonds usually provide some relief, but recent interest rate hikes have yields falling along with stock prices.
Buy low is a tried-and-true method that may hold out for the coming year. But with the market being so unpredictable, there is no reliable solution. Even asset allocation could be tricky.
Alternative Investment Options
Considering the sad state of the stock market, alternative investments, such as commodities, real estate, crowdfunding, and peer-to-peer lending, could be the way to go. Their reduced correlation to stocks and bonds makes them a promising option in times of increased inflation and volatility. Their dividends may bring in high returns.
Many alternative investments are recommended for seasoned investors only, but there are several low-cost exchange-traded funds (EFTs) and mutual funds that are recommended. Although these investments may be expensive, they are likely to bring in higher returns as compared to traditional options.
Savings Bonds
Bonds are not generally doing well in today’s market, but savings bonds are a different story. The Series I savings bond is especially worth looking into. In April of 2022, the bond jumped to an all-time 9.62% high, a sharp contrast to the S & P’s 15% annual decline.
Investors jumped on a chance to get in on the ground floor buying $979 million in bonds on October 28, the last purchase day before the semiannual rate reset, crashing the Treasury Direct website. But even after the reset, the bonds are still doing well. The current rate of 6.89% will be available through April 30, 2023.
What About Crypto?
Once all the rage, crypto has been a disappointment for many investors. The midyear crash left market values reduced by hundreds of billions of dollars. The market was further hampered by layoffs, growing pain issues, and the sudden implosion of FTX.
But there is some life in crypto yet. Efforts are being made to encourage investors in the form of cash reserves rather than trendy celebrity endorsements. Developments in cryptocurrency regulation should also be helpful.
The Renewables Market Looks Promising
The supply chain issues that have lingered since the pandemic have negatively affected growth in the clean energy industry. But the Inflation Reduction Act of 2022 and the $1.2 trillion infrastructure bill of 2021 puts America in good shape to refocus on the market. As a result, we should be seeing a lot more electric vehicles and solar panels.
Investors may consider investing in mainstay companies like BDO Global, Toyota, and (dare we say) Tesla. But rivals will be popping up in the form of Chevy, Ford, and Rivian. This begs the question not of whether to invest in renewables but which company to invest in.
Other Trends to Consider
● Hybrid Robo Advisors: Hybrid robo-advisors offer algorithm-based investing advice. Though once trendy, in 2022, investors moved to traditional advisors, perhaps because they could afford them. In 2023, robo-advisors may regain popularity as investors have less money to throw around.
● More Layoffs: Companies may be laying off staff to reduce costs and appease shareholders. However, the rising unemployment may do more harm than good on a larger level.
● Goodbye TD Ameritrade: Investors will be saying goodbye to TD Ameritrade, an award-winning investment platform. The company will be absorbed by fellow heavy hitter Charles Schwab. The change takes effect at the beginning of the year.
Final Thoughts
The economy has made for much uncertainty in the market. Investors will still come out ahead if they make wise investment choices. Alternative options, savings bonds, renewable stocks, and crypto could be the way to go.
What will you be doing to keep your investments thriving in the coming year?
