2022 was a challenging year for investors, but it’s time to leave the past behind and focus on the best long-term investments for 2023. If you had a portfolio decline last year, don’t worry. When you invest for the long term, short-term fluctuations become less significant. However, caution is still necessary in today’s uncertain financial markets. So, let’s explore the right mix of investments to maximize your portfolio growth.
What to Invest in Right Now for the Long Term
While there are numerous investment options available, it’s crucial to select a few that are likely to provide the best returns. Here are five top investment choices for 2023:
1. Exchange Traded Funds (ETFs)
ETFs have become incredibly popular among investors due to their ability to provide diversified portfolios of securities. Unlike mutual funds, ETFs trade like stocks and can be purchased for the price of a single share or less. This makes it easy to diversify your portfolio, even with a small amount of money. Consider exploring J.P. Morgan Self-Directed Investing Platform for tools to help you evaluate the best ETF options.
2. Dividend Stocks
Dividend stocks are a smart choice, especially during uncertain market conditions. They have a track record of weathering stormy markets better than growth stocks. Blue-chip stocks that pay dividends, like Apple, Mastercard, Visa, and Walmart, provide stability in unpredictable environments. You can invest in dividend stocks individually or consider the Dividend Aristocrats – a group of 60+ companies from the S&P 500 that have increased dividends for at least 25 consecutive years. M1 Finance offers a user-friendly platform that allows you to invest confidently in dividend stocks and provides automatic dividend reinvestment.
3. Short-term Bonds
In 2023, short-term bonds are offering higher interest rates compared to long-term bonds due to an inverted yield curve. This means that you can earn high interest while preserving your capital by investing in Treasury notes with two-year durations or less. Public allows you to buy Treasury bills for as little as $100 and track their yield over time in their app, alongside your other investments.
4. Real Estate
Real estate has always been a strong contender for long-term investments. While investing in individual properties requires significant capital and management, real estate crowdfunding platforms offer a simpler option. With platforms like RealtyMogul, you can invest in commercial real estate projects and benefit from professional property management. Another option is investing in Real Estate Investment Trusts (REITs), which trade like stocks and offer high dividend yields.
5. Alternative Assets
Investing in alternative assets has gained popularity in recent years. This category includes investments beyond stocks, bonds, and real estate, such as private equity, precious metals, cryptocurrencies, and more. Alternative investments provide diversification and increased return potential. Platforms like Yieldstreet and Masterworks provide opportunities to invest in alternative assets like legal, art, and commercial with their crowdfunding models.
How to Best Invest for the Long Term
Now that you know the top investments for 2023, let’s explore strategies to become a better long-term investor:
Plan to be in for the long term
Investing requires a long-term commitment. Be prepared to disregard short-term market fluctuations and commit to a long-term outlook. Regularly invest, even during market downturns, as history has shown that markets eventually recover.
Know your risk tolerance
Determine your risk tolerance before investing. Vanguard’s free Investor Questionnaire can help you understand your risk tolerance and recommend suitable asset allocations. Conservative investors should lean toward bonds and dividend stocks, while aggressive investors can favor growth stocks.
Diversify
Diversification beyond stocks alone is essential. Even if the stock market shows signs of recovery, maintain positions in fixed-income investments and cash to minimize the impact of unexpected market declines and take advantage of lower stock prices.
Keep contributing to your investment accounts
Regular contributions to your investment accounts, coupled with investment gains, are key to successful investing. Participate in employer-sponsored retirement plans or set up regular direct deposits from your paycheck to benefit from dollar-cost averaging.
Fees matter!
Be mindful of fees when investing in funds. Choose funds with low expense ratios to maximize your investment earnings. Use tools like FINRA’s Fund Analyzer to analyze and choose funds with lower fees.
Hire a financial advisor
Consider hiring a financial advisor if you lack confidence in managing your portfolio. A good advisor will evaluate your risk tolerance, goals, and obligations to create a suitable portfolio and provide ongoing management. Platforms like WiserAdvisor and SmartAsset can help you find the right advisor for your needs.
Long-Term Investing: It’s a Marathon, Not a Sprint
You don’t need to be a financial expert to succeed as an investor. By making smart investment choices and following effective strategies, you can increase your chances of financial success. Explore the investment options and strategies mentioned in this article, but if you feel unsure, don’t hesitate to seek guidance from a financial advisor.
Remember, your future financial success hangs in the balance. Make the right choices now and seize the opportunity for a brighter financial future.
INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE