Be honest: 2018 wasn’t as kind to your investment portfolio as you’d wanted it to be. S&P’s decline in North America and the changes that followed after the whole Brexit debacle in Europe certainly didn’t do MNCs and blue chip companies any favours, though startups in Europe did comparatively better than 2017’s almost disastrous performance, thanks to the EU’s venture capital stimulus.
This has left many wondering what investment options for this year will help them recoup from last year’s losses, and help them bolster their portfolios for 2020. Below are our investment recommendations that we think will help you achieve your 2019 goals:
If you’ve had an especially bad 2018, you may want to play it a little safer this year, and investing in dividend stocks can help you toward that end. If you aren’t already aware, dividends are a cut from a company’s profits paid out to stockholders. Depending on the market, dividend stocks usually have annual returns that average at 7%, and consistently outperform non-dividend stocks by a considerable margin.
Dividend stocks are significantly safer investments since you are bound to profit from appreciation in the long term yet still earn money in the meantime. As such, dividend stocks can be very liquid, especially those that are paid out quarterly. If you have dividend stocks on your portfolio, keep them and reinvest the dividends that you earn to maximise your profits.
Similar to dividend stocks, growth stocks are commodities that do better over time. These are stocks that belong to growth-stage companies that are rapidly gaining traction in the market, which makes for significant returns on your investment. They are safer than startup stocks since these companies tend to be more stable, though the risk of failure is always there, which makes them volatile.
Finding growth stocks last year was nearly impossible, but this year may be different thanks to last year’s stimulus and to broader interest rate reductions. It’s best, however, to do your research before you invest in growth stocks since they are susceptible to market conditions, meaning they can be profitable one moment and valueless the next. Be sure to exercise caution if you don’t want to lose money!
Online Real Estate
Online real estate investments allow you to enjoy the benefits of owning property without having to manage it, collect rent, or deal with tenants. Also known as real estate crowdfunding, it allows you to invest in private real estate assets through an online investment platform that partners with property owners, developers, and managers who wish to raise funding from multiple investors.
On top of lower investment minimums (400€-500€), online real estate investments generate you better returns than typical real estate stocks due to the funding vehicle’s structure. This makes it optimal if you want to diversify into something new that has had impressive returns consistently over the past five years.
P2P lending is a type of debt financing that has seen rapid growth in the past few years. It works by pooling resources from multiple lenders and loaning it to borrowers, kind of like a mutual fund. As such, your returns will be from the dividends that accrue over the course of the loan term.
Unlike traditional modes of debt financing, P2P lending doesn’t require you to have significant pools of money to invest since minimums can range anywhere from 20€ to 4000€ depending on the platform. P2P lending is relatively safe, all things considered, since most of them spread out individual investments across multiple borrowers, which means each of your eggs is in different baskets, so to speak. It’s a great way to regrow lost assets for next year’s set of investments.
Finally, equity crowdfunding is another way you can diversify your portfolio this year. With a good portion of your assets allocated to safe investments, equity crowdfunding allows you cost-effective access to premium ROI rates and growth stocks that aren’t listed on stock indices.
Because companies that use equity crowdfunding don’t have to acquiesce to reporting requirements imposed by stock exchanges, they have savings that could be passed on to investors, guaranteeing interest rates that are typically in the double digits. Campaigns launched via EC usually have shorter loan terms as well, which means you can get up to 20% in interest rates – depending on the campaign terms – in just six months if things go right.