There are plenty of reasons to invest this year. For a start, the economic and fiscal conditions look to be ripening. There are few fears of a ‘fiscal cliff’ in the United States in 2014 while the financial difficulties of the past few years in parts of Europe and in Japan appear to be receding. In addition, there is added impetus to invest. Today’s generation are unlikely to benefit from the same generous pensions that their parents will enjoy. So, if you are looking to invest, consider some of the following options.
- Undervalued, global brands
The world is of course becoming a much bigger market than it has ever been. As a result, a good way to protect yourself from the financial pitfalls of a single economy or currency is to invest in companies which have a significant presence across the globe. If you can reduce the local exposure of your investments then they are likely to remain more stable. Of course, there are plenty of global brand stocks to choose from. However, two ideas are Adidas and tobacco giant Philip Morris International, which is tipped by some pundits for good things this year.
This might initially appear to contradict the previous point. Experts have been promoting the virtues of investing in the likes of India, Brazil and Korea, so-called emerging markets for some time now. These are growing economies and the International Monetary Fund estimates that they will grow at two or three times the rate of the United States. The results in emerging markets haven’t been as positive as some expected over recent years, but some commentators believe that now is the right time to invest. Stocks in these markets appear to be generously valued although it is wise not to invest in a single currency fund. At any rate, emerging markets provide some important diversity to more standard investments.
Often considered to be an ‘exotic’ investment, binary options are not only popular but actually a pretty safe way to invest. In truth when you use binary options, you never actually purchase a stock, commodity or currency. Instead, you invest in the option of whether such an investment will increase or decrease in value over a chosen period of time. Because the extent of the fluctuation doesn’t matter, only the direction of market movement, the risks are simple to calculate. There are also plenty of online platforms which make the whole experience easy to manage.
While we’re on the subject of easy to handle investments, if selecting specific stocks is a bit too much hard work, then it is certainly worth considering a tracker option. It does not require knowledge of specific companies or intensive management. Instead, if you invest in say a FTSE 100 tracker fund, then your investment will be spread over all 100 companies. As a result, if the FTSE 100 increases in value, so does your investment. The only thing to look out for is to make sure that your tracker fund doesn’t levy a significant additional management charge.
Of course, you may well feel that you want to ‘get your hands dirty’ by investing in some specific stocks. You will find that everyone provides different advice on individual companies. However, there are some guidelines to bear in mind. It may be worth focusing your investment in some specific industry areas. If you develop expertise in these areas, it will stand you in good stead. If you do invest in specific stocks, then keep an eye out for the company’s cash flow, not just their profits.