2022 has seen a stock market, and wider economy, defined by dips and troughs. Reuters recent analysis of a bear turned bull market on the S&P has ushered in yet another period of volatility, leaving institutional and retail investors alike scratching their heads at where to find value.
As with many volatile market cycles, the trick to finding high efficiency, low risk investments during this time is through the basics. There are fundamentally sound strategies to attack market investment with, and getting a good handle on them will provide a foundation to onward success. First, consider precious metals.
Precious metal markets
Gold, platinum, silver, palladium, rhodium; precious metals have long been a way to act as a store of wealth, providing slow and steady gains that reflect the overall economic wellness of the world while giving a very tangible investment. Investing in metals themselves can be done in a number of ways.
One way is through the commodities market, where you invest in the price; but there’s also spot price trading, where you buy the metal at its specific base value in time – plus commission to the broker. Gold in particular is an effective store of wealth at this time.
According to Bloomberg, the precious metal has seen significant financial gains in 2022 as wary investors turn to ways of reserving their wealth; gains have extended past the $1,700 mark for bullion now, and October has seen a strong surge. This can be a steady way to preserve wealth, and will generate a decent ROI.
Blue chip stocks
When recession hits, the stocks left among the market rubble are those with a fundamental power in the US economy. Known as blue chip stocks, they represent value as they almost always provide a 5-year ROI.
Of particular interest should be blue chips that are currently trading at lower prices, claim Yahoo, and they provide in that regard seven suggestions – British American Tobacco, Alphabet (Google), IBM, JP Morgan, Pfizer, Verizon and ExxonMobil.
They trade at low valuations even during bull markets, but retain value in a way that can be attractive to nervous investors.
Penny stock gambles
Putting money into penny stocks isn’t necessarily frugal. It’s exchanging money for a low chance of big gains, which goes against the risk/reward balance typically favored by people who like to live a frugal lifestyle.
That being said, if you are happy to bring in a certain margin of error into your stock portfolio, investing in penny stocks can be a low risk way to invest that money without risking severe financial harm.
Research is key – does the company and its fundamental product appeal to you, and is there good corporate governance? According to investment guru Tim Sykes, Apple, Ford, Turtle Beach and Monster were all once penny stocks – and now they’re giants.
Ultimately, however, you want to reduce risk while maintaining close control of your portfolio. Finding slow but steady investments is the key to that.