This is a challenging time for investing. It always is. After about five years of stable growth in the stock market, the past six months have been stable around the same level for the major stock indices, including the DOW and S&P 500, using the Google Finance (2015) online data and graphs. It has been easy over the past five to seven years for American investors to invest in Mutual Funds, like an S&P 500 mutual fund, and use a "buy and hold" strategy. But now things are stagnating and not much money is being made this way. So what are some good investments in 2015?
The economic forecast is mostly positive for 2015 so far, excluding any external shocks, such as war, massive droughts, disease, etc. An external shock is always possible so you should keep a good percentage of your portfolio in a safe place, such as money market funds. Also, as you get older and don't have time to wait for the market to recover, you should put more of your investments in very conservative locations with low risk.
Investing in your own home is an excellent investment. In fact, it's imperative! You can pay down the mortgage principal while renovating. Additional real estate investments are hot in various cities now across the U.S. where appreciation rates are high. Appreciation means prices are going up. Prices go up because demand is high. Demand is high where incomes are strong or because the community has major attributes like excellent schools. So that economic logic would help to locate the best cities for real estate investment. Here are some cities with high appreciation rates according to Neighborhood Scout (2015): Caldwell, ID; Huntersville, NJ; and St. Petersburg, FL. There are many other cities listed there and on similar web sites.
Let's consider bonds! The Fed predicts to raise interest rates soon this year. They will use Open Market Operations to decrease the money supply. They will sell U.S. Treasury Bonds. Bond prices will go down. When bond prices do down, interest rates go up. See the Fed site for a more complete explanation. We have enough information to draw conclusions for bond investments. Existing long term bonds, having a life over a year, don't look good because their prices will go down. Short term mutual funds for bonds look good because they will be buying new bonds at lower prices which pay higher interest rates. Short term bond mutual funds will have strong yields, i.e. strong returns. Bonds are usually more conservative than stocks and have lower risks of losing a lot of money. In fact, investors often switch to bonds when stocks are losing badly.
Let's look at stocks. Many of the Mutual Fund stock groups, such as Mid-Cap and Large-Cap are sitting stable now. To make strong individual stock picks you need to consider their past performance, their financial statements, risk, return, price-to-earnings ratio, etc. You need to know which strategies you are using, such as growth or earnings. You should consult a financial advisor. Here are a couple of suggestions. The NASDAQ is the only major stock index to show recent growth. Palo Alto Networks Inc (PANW) and Cisco (CSCO) are both recommended in a recent article on InvestorPlace by Jeff Reeves (2015). Of course, the returns are higher and risks are higher.
In summary, diversify your portfolio to accommodate risk! Invest in your home! Put money in savings! Buy short-term bond mutual funds and buy some stock!
The economic forecast is mostly positive for 2015 so far, excluding any external shocks, such as war, massive droughts, disease, etc. An external shock is always possible so you should keep a good percentage of your portfolio in a safe place, such as money market funds. Also, as you get older and don't have time to wait for the market to recover, you should put more of your investments in very conservative locations with low risk.
Investing in your own home is an excellent investment. In fact, it's imperative! You can pay down the mortgage principal while renovating. Additional real estate investments are hot in various cities now across the U.S. where appreciation rates are high. Appreciation means prices are going up. Prices go up because demand is high. Demand is high where incomes are strong or because the community has major attributes like excellent schools. So that economic logic would help to locate the best cities for real estate investment. Here are some cities with high appreciation rates according to Neighborhood Scout (2015): Caldwell, ID; Huntersville, NJ; and St. Petersburg, FL. There are many other cities listed there and on similar web sites.
Let's consider bonds! The Fed predicts to raise interest rates soon this year. They will use Open Market Operations to decrease the money supply. They will sell U.S. Treasury Bonds. Bond prices will go down. When bond prices do down, interest rates go up. See the Fed site for a more complete explanation. We have enough information to draw conclusions for bond investments. Existing long term bonds, having a life over a year, don't look good because their prices will go down. Short term mutual funds for bonds look good because they will be buying new bonds at lower prices which pay higher interest rates. Short term bond mutual funds will have strong yields, i.e. strong returns. Bonds are usually more conservative than stocks and have lower risks of losing a lot of money. In fact, investors often switch to bonds when stocks are losing badly.
Let's look at stocks. Many of the Mutual Fund stock groups, such as Mid-Cap and Large-Cap are sitting stable now. To make strong individual stock picks you need to consider their past performance, their financial statements, risk, return, price-to-earnings ratio, etc. You need to know which strategies you are using, such as growth or earnings. You should consult a financial advisor. Here are a couple of suggestions. The NASDAQ is the only major stock index to show recent growth. Palo Alto Networks Inc (PANW) and Cisco (CSCO) are both recommended in a recent article on InvestorPlace by Jeff Reeves (2015). Of course, the returns are higher and risks are higher.
In summary, diversify your portfolio to accommodate risk! Invest in your home! Put money in savings! Buy short-term bond mutual funds and buy some stock!
RSS Feed
