The Best Investment Opportunities For 2023
The world of investing is full of opportunities for savvy investors to generate profit. With so many options to choose from, it can be difficult to know which to choose. In our article, we have compiled a list of the best investment opportunities to grow your wealth. We will explain each investing opportunity in detail and provide a few examples to get you on the right track!
We start our list with the opportunity which first springs to most peoples’ minds when they think of investment – stocks.
Although stocks are a fairly straightforward concept to understand, they should not be approached as such. When you purchase shares in a company, you are essentially acquiring a small percentage of that company. The value of your investment will be directly tied to the future success, or failure, of the company whose shares you purchased.
Therefore, before buying shares in a company, it is important to conduct a thorough analysis of the company in question and evaluate whether buying their shares is in your best interest. Here are a few important factors to consider when investing in a listed company:
- Financial Results - Every listed company regularly publish their financial results. Don’t just look at the most recent ones, but have a deep look over the past few years to get a good idea of the shape the company is in. Is it growing? Stagnating? Or in decline? Some important metrics to consider are; revenue, net income and earnings per share (EPS).
- Industry - What industry does the company operate in? Research this industry and familiarise yourself with it, in particular its future prospects and any potential challenges ahead.
- Competition - How much competition does the company face within its industry? Is it better equipped to succeed than its competition? If not, then you may be looking at the wrong company.
- Share Price - Is the share price an accurate reflection of what your research has told you about the company? Share price is determined by the levels of supply and demand in the market - meaning that, occasionally - when demand outstrips supply, a company’s shares can sell for more than they are really worth. Of course, the opposite is also true. Try to avoid paying over the odds for “trendy” stocks.
Stocks represent a very broad investment opportunity, as you can purchase shares in companies from many different sectors and from economies all over the world.
Just as there are many different types of stocks to choose from, the approach one takes towards the stock market can be just as varied. As well as the more traditional approach of buying shares and holding them over the long-term (buy and hold) in an attempt to benefit from a rise in share price, there are other investment strategies such as value investing, growth investing and income investing.
The next investment vehicle we will look at are bonds, which, especially when compared with the previous entry on our list, represent one of the more stable investment opportunities.
Bonds are a fixed-income investing opportunity, where the investor essentially lends money to the bond issuer. In return, the bond issuer undertakes to pay the investor a fixed rate of interest for a predetermined period of time. Once that time comes to end, the bond has matured and the issuer is obliged to repay the original loan amount, the principle, in full.
Bonds are mainly issued by governments and corporations and, although they are viewed as a comparatively safe form of investment, they are certainly not without risk. As with any type of debt, there is the risk of default. The level of this risk depends entirely on the issuing body and has a knock on effect on the bond’s yield, with lower risk bonds having lower yields and vice versa.
Fixed-income instruments such as bonds are mostly popular with investors who have a small appetite for risk. However, their predictability and stability can make bonds a valuable addition to a well-diversified investment portfolio.
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Exchange-Traded Funds and Mutual Funds
Unlike stocks and bonds, where each investment will provide exposure to one company or a solitary bond, Exchange-Traded Funds (ETFs) and mutual funds provide instant diversification across a range of assets with a single investment.
Both types of funds function by pooling investor money to buy a basket of assets, such as stocks and bonds. These assets are chosen to represent a specific sector, stock index or economy and can be either actively or passively managed. An actively managed fund attempts to outperform its chosen market by selecting the best instruments in that sector, whereas one which is passively managed seeks merely to mirror the market.
These qualities make both ETFs and mutual funds good investment opportunities for beginners or investors who do not have the time to scrutinise individual stocks or bonds.
Whilst ETFs and mutual funds are similar they do have several differences, the most important of which is how they are bought and sold. Investors purchase shares in mutual funds directly from the company which manages the fund, or through a brokerage firm, and, whenever they decide to liquidate their position, they sell their shares back to the fund. ETFs, on the other hand, are bought and sold throughout the day on the stock exchanges - in exactly the same manner as shares.
Vanguard S&P 500 UCITS ETF
ETFs and mutual funds can be based on just about anything, but the types of funds which have been growing in popularity in recent years are those which passively track stock indices.
Such funds will hold shares in all the companies which make up the underlying stock index. For example, the Vanguard S&P 500 UCITS ETF (VUSA) passively tracks the S&P 500 stock index.
Therefore, by investing in this ETF (or any other ETF which tracks the index) an investor can gain exposure to 500 of the largest companies by market capitalisation in the US. When held over the long-term, these types of funds can be one of the most reliable investment opportunities for creating wealth.
Depicted: Admirals MetaTrader 5 – Vanguard S&P 500 UCITS ETF (VUSA) Daily Chart. Date Range: 30 March 2020 – 8 June 2021. Date Captured: 8 June 2021. Past performance is not a reliable indicator of future results.
Investment opportunities are not limited to stocks and bonds, there are many other asset classes from which to choose from. Commodities are one such example and represent an interesting investing opportunity for those seeking to diversify their portfolio.
The most popular commodities for investment purposes tend to be precious metals, in particular gold, but there are many others to choose from – copper, crude oil and cotton to name a few.
The popularity of investing in gold lies in its quality of being a safe haven asset – meaning that it retains or increases in value when there is economic uncertainty. Therefore, gold can be a wise addition to an investment portfolio, as it tends to thrive at the same time at which the stock market is floundering.
Whilst it is possible to buy physical gold, doing so poses a number of logistical issues, not least of all storage. Therefore, investing in a physically backed gold ETF is a more convenient prospect for the majority of investors.
Depicted: Admirals MetaTrader 5 - Aberdeen Std Physical Swiss Gold Shares ETF CFD (#SGOL) Weekly Chart. Date Range: 29 July 2018 – 8 June 2021. Date Captured: 8 June 2021. Past performance is not a reliable indicator of future results.
Property presents another investment opportunity for those looking to invest their money in an asset class which is independent of the stock market. Property is a tangible asset and is something that, regardless of what is going on in the world, people will always need. Although, as with any other asset, the property market goes through peaks and troughs.
For those who do not have the capital required to buy property themselves, there are numerous ways of investing in property without purchasing a house. One of the most popular ways of doing so, is through Real Estate Investment Trusts (REITs).
A REIT is a company which acquires or develops, and then manages, various income generating properties, such as apartment buildings or offices. REITs operates in a similar fashion to ETFs, using a pool of investor funds to undertake their activities and, in doing so, allow their investors to enjoy some of the benefits associated with owning income generating properties without many of the associated headaches.
In the UK, companies which qualify to be a REIT are exempt from corporation tax on its property rental business as well as from any capital gains tax incurred when selling these properties. One of the conditions of receiving such preferential tax treatment is that a REIT must distribute at least 90% of their tax-exempt profit to shareholders in the form of a dividend.
Depicted: Admirals MetaTrader 5 – Whitestone REIT Weekly Chart. Date Range: 6 September 2015 – 8 June 2021. Date Captured: 8 June 2021. Past performance is not a reliable indicator of future results.
Investment Opportunities – Final Thoughts
Hopefully, after reading our article you have a better understanding of the investment opportunities available to you in 2023. Remember that it is not necessarily a question of choosing just one of these investing options, the most successful portfolios are ones which are diverse, holding a blend of different assets.
If you are new to the world of investing, you might benefit from reading our other article: “Eight Important Investment Tips For Beginners”
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.