Wednesday, 23 January 2013

Top 10 ways to invest in the new year

1. Property

With property prices at their lowest for many years, 2013 could be a good year to purchase a second property and enter the rental market. There are always risks attached to property investments: prices could fall even further or you may find yourself saddled with problem tenants. This is not a short-term investment but it could be extremely lucrative.

2. Stocks and shares

There is a great deal of satisfaction to be gained from cherry-picking shares which go on to perform well. The key to success is to diversify your shareholdings or, if this option requires too much research, you could invest in a stock fund and let the fund manager do the leg-work for you.

3. Stock funds

These funds can be used to invest in a particular industry, so you can target your investment towards newer technology companies or well-established ‘blue chip’ companies. Fund managers have the benefit of specialised financial systems, such as those provided by APT.

4. Bonds

Bonds are typically a lower-risk investment as you effectively lend money to the bond issuer (normally a government or large corporation). You will receive a guaranteed interest rate for the life of the bond plus the return of your initial investment once the bond matures.

5. Bond funds and income funds

Instead of choosing to buy a particular bond, you may prefer to spread the risk over a number of different types of bond by pooling your money with other investors in a bond or income fund. Whilst generally considered lower risk, you must be aware of both interest rate and credit risk.
6. Gold

Whilst gold is a commodity, it merits a special mention due to the huge demand for gold, and the resultant increase in price. This is why so many ‘cash for gold’ type companies have appeared over the last couple of years. There is some debate over whether or not the recent price slump is serious but it could be an excellent time to buy.

7. The shale gas revolution

Despite the bad press, it looks as though ‘fracking’ is set to increase throughout 2013. Incredible as it may seem, the US could become self-sufficient in terms of energy supply and the UK is looking to follow suit.

8. Other commodities

Investing in commodities has become increasingly fashionable recently due to the huge price rise for commodities such as oil and base metals. However, caution should be exercised as the bite of the global recession can be felt in this once-lucrative market. There are still some commodities, including meat and water, which are extremely attractive to those looking to invest in 2013.

9. Investing in emerging markets

The hot topic of 2012 was investment in emerging markets and this trend is set to continue in 2013. The hub of wealth appears to be moving from West to East and it’s worth considering investing part of your portfolio in emerging markets. To help you decide which emerging market to pick, consult a market risk model which will estimate risk for different asset classes within a given market.

10. Alternative investments

If you would rather put your hard-earned cash into something more tangible then an alternative investment may suit you. When consumer prices start to climb, history has shown that there is money to be made from investing in artworks, fine wines, classic cars and other luxury items that should continue to appreciate in value.


Guardian article explaining why would-be first time buyers are being forced to rent

London Stock Exchange

A Wikipedia article on emerging markets

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