Finding safe investment opportunities has been harder than ever before since 2020. Covid-19 and lockdown didn’t just decimate existing businesses, even the new industries it created in the online space have been riddled with risk.
We may be out of the pandemic, but the world economy isn’t: inflation rates have risen all over the world, the West is experiencing a debt crisis, and interest rates are negative. Money keeps losing its value though, so here are some of the safest opportunities this year if you’re looking to invest. In this article, we have asked different business owners regarding the best business investment opportunities and this is what they have said:
Gold
It’ll be a cold day in hell when Gold makes it off lists like this. The precious metal has a history of retaining its value no matter what the world goes through, and it hasn’t failed in the pandemic. This is primarily due to the fact that gold acts as a hedge against high inflation. As a currency loses its purchasing power, gold is still priced in the same currency units and its price rises proportionately.
Part of the safety in this investment is how much the average person trusts gold. When markets become volatile and people lose confidence in their own currency, they buy gold to store value. What most people don’t know is that global gold production started declining again in 2021 and a new mine is going to take a decade to get going. Prices will rise and not only will you retain value, you’ll make a profit, shared by Alex Williams, CFO of Findthisbest.
Dividend Stock Funds
This is best suited for intermediate to advanced investors if you’re looking to buy individual stocks, but buying a group of them in a stock fund is much less risky. Since dividend funds are going to get you a payout from the company every quarter, you’ll have a consistent return on your investment alongside any value the equity builds over time. If you’re just starting your investment journey, check out ETFs or mutual funds. They don’t have a minimum investment option and are typically commission-free, said Jasen Edwards, real estate expert and chair of the agent editorial board at Agent Advice.
Considering this is still a stock option, it carries all the regular risks of volatility that stocks have. When choosing your portfolio, you should focus more on a strong history of paying dividends rather than higher current revenue. That’s usually a sign of incoming trouble, and companies will cut their payouts if they need to maintain the revenue they’ve built. Even established companies will slash dividends in a crisis. The only surefire of safeguarding yourself is building a diversified portfolio that spreads your money around.
Real Estate Investment Groups/Trusts (REIGs and REITs)
You were probably waiting for property to show up on this list, and for good reason. Eli Pasternak, founder of Liberty House Buying Group, believes “land may be the safest asset somebody can have, and real estate is a key diversifier in investment portfolios. However, managing properties is expensive, tedious, and time-consuming for busy investors.”
REIGs solve several of those problems. They’re like mutual funds that invest solely in real estate, allowing members to have partial ownership of a project. For instance, the group will make an apartment complex and you can join the REIG by buying a self-contained living space. The lease stays in the investor’s name, but he pays a portion of the revenue from rent to management for their (considerable) services.
CJ Llyod, owner of Utah’s Best Home Pros emphasised the value of REIGs and said “Not only do they handle maintenance and management, they take responsibility for finding and interviewing tenants. If you’re worried about losing money due to vacancies in your rental properties, the group helps out with that too. All members pool a small portion of their rent to guard against potential vacancies. This ensures a source of income from your investment even if your unit is vacant for a while.”
A REIT is essentially a formal REIG, offering some more perks. They pay out dividends to their investors in exchange for corporate tax exemption. As long as they’re publicly traded, they have dozens of stock options in different sub-sectors for you to choose from. Frequent dividends make them good for income-oriented investors, but there’s a chance for capital gains too. Just be careful about REIT’s that don’t trade publicly.
S&P 500 and Nasdaq Index Funds
It’s hard staying in the stock market while avoiding risk, but this option provides the best chance to do so. The S&P 500 index is a collection of America’s strongest companies, so they naturally provide a buffer against volatility. If you want to stay invested for three to five years and don’t mind a bit more risk than bonds in exchange for higher possible returns, this is the ideal investment for you, said Jessica Shee, Marketing Manager at iBoysoft.
The Index fund will let you diversify your assets enough that an individual company’s misfortune won’t hurt you. Of course, there’s always risk in the market and these funds don’t have government insurance, but the S&P 500 companies have performed very well historically. Considering you get a piece of all the companies in virtually every industry there is, it’s not as volatile as the stock market.
However, if you like some risk, you can head to the Nasdaq. It’s basically the S&P 500 list, but it’s just for the 100 best tech companies. It’s better than investing in an individual tech company because of diversification and is generally valued pretty high. However, that also means these companies are the most vulnerable in an economic downturn. They’ll come back just as fast though, so only go down this road if you’re willing to hold for 3-5 years.
Private Investment.
Private investment has always been an option – and you can make the case for the highest returns on investment to come from private investors. They’re obviously much riskier than a diversified fund, but research shows private investors to be on the rise. People are increasingly vary of large trusts and corporations, as well as government-controlled bonds. They choose to trust their expertise and look for opportunities in the sector they feel confident in, said Simon Brisk, Cofounder of Click Intelligence.
Going down this road has its risks, but it gives you much more control over what happens with your money. Being closely linked to the team, the industry, and the product, along with a large enough stake in the company to control the direction, allows returns to go together with the effort the investor puts in. As confidence in public markets declines, that’s where people seem to be headed.
