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​Best 6 Investments for 2022 – Experience Levels, Benefits and Risks Explained

You know how it works – every year, you look for new investments, only to notice trends change a little. Some investments are similar to the previous year, but you also notice some new entries – this is how the industry works.

Whether you want to multiply your money or diversify your assets a little, there are plenty of potential investments out there, and each of them comes with specific benefits, as well as some risks – no investment is risk-free.

With all these, some investments are safer than others. They come with lower risks, yet they may require more time to show some results. This article will take you to some of the most popular investments of the moment, as well their pluses and minuses.

But before going there, why would you invest?

Reasons to invest your money

Investing money implies gaining a source of income. You can keep it in a bank and get about 0.01% a year, which is nothing, but you can also invest it. An investment might as well fuel the retirement or even help you out of a financial jam.

In general, it’s a wise choice to let your money work for you.

Investing will also help you build wealth, but then, you need to find a balance between the potential gains and losses. In order to do so, you need a certain financial position – in other words, your debt must be manageable.

On the same note, an emergency fund is mandatory – you shouldn’t depend on the money you invest.

In terms of actual investments, there are many ways to do it. You can get CDs or perhaps corporate bonds. You can invest in stock markets or maybe cryptocurrencies. You get the point – diversify your portfolio for extra safety.

Now, what are the best six investments out there, and what makes them so special? 

S&P 500 index funds

If you’re not into classic bonds or banking products, S&P 500 index funds provide great returns. However, such an investment will inevitably bring in more volatility. A fund targets around 500 large companies in the USA – basically, you invest in some of the largest companies in the world.

Take Apple for example, or maybe Tesla or Amazon.

You get diversification because you end up owning a tiny piece of those companies. They come from all sorts of industries. The index aims to provide around 10% on a yearly basis – based on the previous growth.

This type of investment offers diversified exposure to the market, so it’s excellent for newbies. For maximum effects, the investment should last over the years.

While there are not so many risks, it’s still based on stocks, so it is quite volatile when compared to bonds. There isn’t government insurance either, so fluctuations can cause you to lose money. Overtime, results have been quite positive though.

Nasdaq 100 index funds

Similar to S&P 500 index funds, Nasdaq 100 index funds provide exposure to tech companies in the world. You no longer need to focus on the best ones, analyze their growth or check potential values in the long run.

The fund covers the largest companies out there. They’re meant to be stable, but also successful. Take Facebook, for example, or maybe Microsoft. Diversification is instant because you do not depend on one company or another, but most of them. The expense ratio is also quite low.

The investment is suitable for those who want growth – but this growth comes with volatility too. Such an investment requires commitment – you won’t go rich overnight. Instead, you should give yourself around five years or maybe even more.

Obviously, since every investment comes with risks, this one should also be considered from a negative direction. Practically, stock collections can go down as well.

But then, Nasdaq 100 covers some of the most significant tech companies out there, so they’re less likely to fail overnight.

Cryptocurrencies 

Electronic currencies gain more and more notoriety. The asset has turned extremely hot lately – besides, the more traders kick in, the hotter it becomes. Bitcoin is the most popular one because it’s the oldest digital coin. However, it also fluctuates a lot and drops massively before growing again.

The general idea so far is fairly simple to notice – while Bitcoin does fall, it tends to grow back even stronger. Despite all these ups and downs, those who buy it when it’s low tend to have some nice gains in the long run.

Now, the value of digital coins depends on what traders pay for them. It’s not backed by governments or companies, which makes it a bit unusual. This type of investment is mostly suitable for those who like a bit of risk, as well as those who don’t mind the significant drops in value.

If you want to limit your risks, Bitcoin and other cryptocurrencies may not make good investments. Now, when it comes to risks, they’re definitely worth some attention – certain coins could be outlawed or may drop to nothing.

Volatility is not a long-term risk either – things could change within hours only. At the same time, traders may also face hacking risks – some reputable companies have been hacked in the past.

Should you choose a digital coin, opt for something with a high chance to stick around.

High yield savings accounts

High yield savings accounts go in two directions. Some people see them as actual investments, while others see them as a way to lose money. At the end of the day, it depends on your actual necessities and long-term goals.

Such an account will pay interest based on your cash balance. Compared to regular savings accounts, these ones will give you more money for your balance. In other words, a classic savings account will give you pretty much nothing – inflation is likely to overcome the gains.

Other than that, high yield savings accounts only have a few overhead costs. When it comes to choosing a bank, online banks tend to provide better rates. Besides, you have constant access to your money. You can transfer it to your regular bank account or perhaps get a card for your savings account.

With these thoughts in mind, high yield savings accounts are good for those who may need access to their money soon. The investment is suitable for those who find other investments risky – those who put money first.

Finally, you should know that such accounts are usually insured, so there are no risks regarding losing the deposit. Overtime, the risk of losing your purchasing power is seriously affected by inflation if the rates are not high enough.

Rental housing

Rental housing is a proven long term investment, especially if you’re willing to manage properties yourself. With mortgage rates still accessible, you could purchase a new property without too much hassle, but management could be risky overtime.

You need to find the optimal property, buy it straight away or finance it, maintain it and handle all sorts of people as tenants. Smart purchases can bring you incredible results, though. Unlike other investments that can be handled with your smartphone, this one is a real-life experience.

You could end up with calls at 2 AM about broken pipes, for example. However, holding assets overtime will pay down debt without too much hassle. Meanwhile, rent rates go up, so the point is to charge enough rent to cover the mortgage and expenses, not to mention the profit.

The investment is suitable for those who seek long-term investments. As with any other asset, you may overpay for the property. Besides, the lack of liquidity could be an issue if you need cash in the near future. Unexpected expenses may also arise randomly.

Dividend stock funds

Stock market investments can be risky, but then, those that pay dividends are even better. In other words, you get a small amount of the company’s profit. These profits go to shareholders on a regular basis – usually, every three months.

This option is suitable from two directions. First, if the company grows, you make money in the long run. Second, you can make money in the short run too, whenever the profits kick in.

This type of investment is not a bad idea for intermediate users. Advanced users will also benefit from them. Reducing the risk is fairly simple if you buy a group, rather than focus on a single company – all about diversification.

When it comes to risks, dividend stock funds are less risky than growth stocks, but you still have to consider the portfolio upfront. Opt for companies with a good history.

Conclusion

Bottom line, these are probably the best six investments over the past few years – based on the actual profits and the potential risks.

Whether it comes to low-risk investments or you prefer a bit of risk in the long run, there is something for everyone out there.

On the same note, it makes no difference what your experience level is. When it comes to investments, you need to do your homework and research the market.

Sachin Negi

Sachin Negi is an entrepreneur and the founder of Growyourtraction, one of the fastest-growing public relations firms in the country. Technology, Machine Learning, Digital Marketing, Big Data, Crypto, and Blockchain are some of his favorite topics to write about. He has worked with over 1000 clients and has had his work featured on practically every major websites.

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Sachin Negi

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