After the turbulent year we’ve all had in 2020, it’s natural to be thinking about ways to protect our assets and create financial security for ourselves and our families. There is endless advice on the web, much of it conflicting, so it’s hard to know where to start. We’re going to take a pragmatic approach with some ideas to help you ensure that you’re moving from a solid base and making the most of your investments.
Start where you are
Before launching into any investment strategy, take a good look at your current financial position. If you’re serious about investing, it makes sense to consult an objective professional who’ll help you understand how financially healthy you are.
For example, if you have a lot of debt, reducing it, or paying it off altogether is more rational than investing spare cash in high-risk stocks. Do you already have a plan in place for retirement savings? Given the tax-advantages of this, as well as the long-term security you’ll be building, it should be one of your priorities.
Finally, look at your cash reserves. In 2020, many of us suddenly found ourselves without an income, so ensure you have a nest egg that’s easy to convert into cash should an unplanned need arise.
Invest in what you know
Investing in something you know and love can generate healthy profits. If you love luxury watches, antique furniture or vintage wine, and know enough to spot a bargain when you see it, buying and selling high-end products is a great strategy. It’s not only the obvious things that appreciate. For example, luxury handbags have increased in value by 13%, year on year, compared to art which has only seen a 5% return.
The stock and forex markets
The stock and forex markets can generate eye-watering profits, but they also carry a high degree of risk. The safest way to start is to invest in a mutual fund, operated by expert fund managers. You’ll have the choice of making a one-time investment or making contributions monthly.
Forex trading is considered the highest-risk game for amateurs. While huge shifts in price, as in the case of cryptocurrencies such as Bitcoin, gain wide attention, in-depth knowledge of the way markets work is a pre-requisite to success.
The golden rule is to set a budget: how much can you afford to lose before it affects your financial health?
Invest in a sustainable business
Given the political upheavals of 2020, there’s likely to be a continued increase in interest in businesses that meet ESG (Environmental, Social, and Governance) investment criteria. If you want your money to go to socially responsible organizations, the good news is that, due to interest from Gen Y and Z investors, these types of companies are experiencing record-breaking cash inflows.
Still, a reliable long-term investment, although due to the changes in working patterns sparked by Covid-19, large retail and commercial properties are no longer the rock-solid choice they once were. However, as more people work from home properties that meet high environmental standards, and those in areas with plenty of breathing space around them are likely to be at a premium over the coming years.