As we start the new year, you may be wondering which strategy to adopt for successful investments in 2022. Should you invest in the stock market? In real estate? What about bitcoin and other cryptocurrencies? Are there other assets you haven’t considered yet?
Here is an overview of the various investments you can make now for a healthy pay-off throughout the year – and even beyond.
The stock markets
Stock markets are an obvious option to consider. After all, it has generated significant wealth in its 230-year history. The S&P 500 alone returns an average of 8 to 12% annually. However, as with any type of investment, successful returns cannot be guaranteed. 2022 is no exception, as we do not know what the year has in store for us. The S&P 500, which tracks the performance of the USA’s 500 largest publicly traded companies, has been known to go up and down every year. Some drops can be quite steep, and this level of volatility could put you off from investing. That said, your decision to invest or not should also be based on your desired investment time frames. Success on the stock market is usually made in the long-term. While success in the short-term is also possible, there may be other investment options that are better suited to you.
Cryptocurrencies
Cryptocurrencies are not always a very popular investment choice because of their high volatility. So why take the risk of investing? Well first of all, cryptocurrencies such as bitcoin are deflationary assets. This means that an algorithm limits their total supply, so that purchasing power increases over time. Second, cryptocurrencies are decentralised which means they are not only secure, but you also have complete control over the possession and storage of your assets.
If you have the means to, we recommend you start with bitcoin. Because while there are still few businesses that support cryptocurrency as a payment method, bitcoin will be their go-to when they do. It is already the most widely exchanged cryptocurrency and major funds will embrace bitcoin more readily than others.
To know more about bitcoin and how to use it, read this article.
The Metaverse
“Metaverse” was quite the buzzword in 2021 and continues to be in 2022. While the concept itself was created thirty years ago, the past year has seen companies focusing their efforts on bringing the metaverse to our everyday lives – and making it an economic success. The fact that Facebook rebranded itself as Meta Platforms shows its dedication to the cause.
Before we dig into the metaverse’s investment opportunities, it is important to understand what the metaverse actually is. Put simply, the metaverse is a virtual space that mirrors real life, but without the rules and restrictions of the real world. In order to enter and interact with this new world, users would need an avatar as well as technology such as a smartphone, computer, game console, VR headset, and so on.
While this sounds pretty similar to any online game, here is an example of how the metaverse adds something new (and more lucrative). Much like the real world, you (or your avatar in this case) might want to wear designer clothes, which the metaverse already makes possible. Luxury brands have indeed been quick to embrace a new business model: the sale of digital clothes and fashion accessories for the metaverse. Among these brands: Balenciaga, Burberry, Dior, Gucci, and several more. And, surprising as it may seem, people seem open to paying (sometimes a lot!) for digital luxury assets.
If luxury fashion is not your thing, there are other opportunities offered by the metaverse, such as digital real estate. These can be purchased as NFTs through platforms such as The Sandbox and Decentraland. The blockchain technology will check the sale and transfer of ownership, after which the new owner can rent, sell or even build their own digital property.
In theory, if the value of these digital assets increases, so does the value of their NFTs. This is why the metaverse is an interesting investment. Especially as the various ways to spend and make money are certain to multiply quickly. That being said, the metaverse and its various business models are still young and volatile, so caution is advised. At this point, it is best to invest in publicly traded companies whose profitability are tied to the metaverse. Examples include tech giants Meta Platforms and Microsoft, and online game platform Roblox.
Non-fungible tokens (NFTs)
We have previously written about NFTs and how they have created a lot of buzz over the past year. As a reminder, NFTs are an asset that represent a unique item or collectible. Trading NFTs means trading ownership of said asset, but not the asset itself.
The current interest in NFTs has taken the crypto community by storm. But is it wise to give into the hype? Well, let’s not be too quick to dismiss NFTs. First, they are stored on a blockchain which means ownership is very secure. Second, the way NFTs work means that each time a sold NFT is traded again, its original owner receives royalties. Also, as previously mentioned, if the value of an asset increases so does the value of its NFTs.
NFTs are therefore an effective way to earn money in a secure environment, making them an interesting asset to invest in. As things currently stand, NFTs have a bright future ahead of them and are definitely worth considering.
Real estate
If you are not sure about cryptocurrencies, NFTs, the Metaverse or even the stock market, do not worry. There are other investments you can make that have nothing to do with either of them. Real estate, for instance, remains a solid investment – especially if you are on the cautious side and volatility is not your thing. Real estate offers lower risk and better returns. Granted, it requires more money as an initial investment. However, if you can afford it (or afford to save for it), then it is certainly worth your consideration.
Real estate is one of the best investments you can make in the long term. Whether you buy to let or simply invest your money into buying your own home, there are serious profits to be made. An added benefit compared to other types of investment: the bank will lend you money and help your money grow.
Wine and vineyards
Investing in wine may seem a little unconventional here in the UK. However, “southern” countries such as France, Italy, Spain and Argentina are no longer the only ones with the right climate for wine production. Climate change has indeed shifted these boundaries to include norther countries such as Canada and the UK. With this comes a shift in investments too. An increasing number of British wine producers are seeing an influx of investments which is helping them increase their sales. And while British wine is not very competitive on an international scene (yet?), Brexit has made it quite important for Britain to rely on its own production rather than on the import of the EU-based wines it is more accustomed to.
Of course, you can invest in any vineyard of your choosing even outside the UK. Many wine producers are seeing a boost in demand, sales and investment. You may want to jump on this opportunity and earn dividends on these sales. However, investing in a wine producer is not the only way to go: you can also invest in wine stock exchanges or wine-specific investment funds, or even buy and store your own bottles to sell at a later date.
As always, the key to a successful portfolio is diversification. For a successful year, make sure you invest in different assets to minimise risk and increase your chances of a healthy payout.
