Little Known Ways To Make The Most Out Of Investing In 2019
12 Apr 2019
Last year was pretty shaky for investors. The stock market has shown that it doesn’t just go straight up when you want it to. There were two stock market corrections last year and they were very steep. This has caused investors to look to more diverse sources for their portfolio. Here are some examples.
1. Dividend stocks are a safe bet
The stock market might have had one of the worst years in recent memory, but that doesn’t change the fact that historically the market is only increasing. Temporary lows won’t affect stocks in the grand scheme of things. When you include dividend reinvestments, there has been an annual increase of 7% in the market for some time now. This kind of return is hard to argue against when it comes to deciding where to invest your money.
Investors are taking a particularly close look at dividend stocks in 2019. The companies that offer these stocks also offer a number of advantages that investors might find attractive. They are also pretty reliable, considering that they have outperformed their non-dividend peers. Dividends rely on time-tested business models which have their own set of advantages. Dividend stocks can help hedge against losses that happen in the inevitable downturns of the stock market. In other words, they give you reliable and safe returns.
2. Consider buying corporate bonds
With the stock market correcting, investments like corporate bonds are starting to look extremely attractive. They might not sound like the most exciting options, but they can be quite profitable if used correctly. What makes these bonds so good is that they are considered one of the safest purchasing options out there. They aren’t as volatile as most stocks tend to be. Market fluctuations don’t have much of an effect on corporate bonds.
As long as you consider buying into investment-grade bonds, you shouldn’t have to worry about your investment not being profitable. However, it’s not all sunshine and rainbows when it comes to corporate bonds. They might be safe, but they aren’t exactly a goldmine. The annual return for these bonds is much lower than what you might get from a solid stock market investment. Inflation is another thing you have to worry about. You could have a lot of theoretical profit, but end up losing actual money when you take into account inflation. One of the best corporate bond options is Microsoft. They yield up to four point three per cent profit for twenty and forty-year notes.
3. Value stocks have potential
Value stocks are proving themselves to be another great investment trend for 2019. In general, stocks are performing much better than most other assets nowadays which is why there is such a buzz surrounding them. In the long run, there’s basically nothing that can beat stocks right now.
What makes value stocks so attractive right now is that there has been a change in monetary policy. The federal government has taken on a hawkish approach in recent times. Cheap lending is not as abundant as it was before. Because of this, investors have turned their eyes to value stocks instead of growth stocks. Over a ninety year period, value stocks have drastically outperformed growth stocks. Appliance giants like Whirlpool are considered a quality value stock. Investing in this kind of stock option has never been cheaper. Price hikes from the trade war with China have temporarily made them more expensive due to rising material costs, but this change is only temporary. Consumers don’t resist price hikes for long and an equilibrium is reached fairly quickly.
4. Peer-to-peer lending
If you’re looking for a fresh new asset to invest in, peer-to-peer investing is a great method to get some safe returns. You yourself are the lender in this situation. It has its own advantages. For starters, you don’t have to interact with any sort of financial institution. You can connect with borrowers and lenders from all over the world at your own leisure. There are pretty high returns for lenders in this scenario and they have very low-risk factors.
The only issue is that you would have to handle several loans on your own. As an investor, you won’t have the time to deal with those loans while taking care of the other investments in your portfolio. Luckily, there are companies that specialize in this line of work that can work as mediators. When you count their fees into the equation, interest rates of your borrowers are comparable to personal loan interest rates, which means you’re going to be looking at some solid returns. Your clients will have low borrowing needs but they will be eager to take your investment. Peer-to-peer lending benefits both parties and the fees that mediators incur are a fraction of the profit you’ll be making.
5. Contribute to an IRA
Opening up an IRA is one of the smartest financial decisions you can make. This has been true for a while now, but in 2019 it’s predicted to be even better. This is due to a crucial change in the system. You are now able to contribute more to the IRA than ever before.
Before this year, the limit for IRA contributions for persons fifty and over was six and a half thousand dollars. This year, that number has risen to seven thousand dollars, which has made this investment opportunity even more attractive than it was before. It’s the perfect tool to ignore the white noise of market fluctuations in the short term. Keep in mind that not everyone is eligible for an IRA, so it would be best to check your eligibility before trying to sign up for one.
Making money in the current stock market isn’t as difficult as it sounds. It’s not a walk in the park either. Still, if you are eager enough to find the best things to invest in, you have quite a few options. All you need to succeed in 2019 is patience and a knack for good ideas.