Will 2022 be your most successful year as an investor yet? maybe. But if that’s your goal, you’ll need to stay away from these blunders.
1. Not preparing for the stock market crash
We do not know what the stock market has in store for the current year. In the past year, stock values have remained largely flat even with the outbreak of the pandemic.
This year, there’s a new variable to contend with. However, there are also new treatments for COVID-19 that may help offset some of the damage it may cause.
Either way, we don’t know how the outbreak will affect the economy or the stock market. And while there’s no reason to explicitly predict a stock market crash, it’s important to prepare for it nonetheless.
For the most part, this means doing a few basic things. First, support your emergency fund. This way, if stock values go down, you won’t have to break into your portfolio while your investments are down.
Next, make sure you are well diversified in your portfolio. Having a great mix of assets can help you face the crash better.
Finally, if you’re fully prepared for emergency savings, store some cash in your brokerage account so you can take advantage of buying opportunities if stock values really drop. Market crashes are often seen as a negative event, but in reality, it can be a great time to invest more.
2. Encoder overload
Whether you’ve been into cryptocurrency or not, you might be eager to load up on it this year. But before you do that, remember that cryptocurrency is still largely a speculative investment. Cryptocurrencies have been in circulation for just over a decade, and it is still unclear whether or not they are a viable long-term investment.
This does not mean that you should not invest money in cryptocurrencies. But should you do it at the cost of being able to add quality stock to your portfolio? Mostly not. Your best bet is to invest a small portion of your available funds in cryptocurrencies, but don’t go overboard with digital currencies.
3. Stay away from real estate
You might assume that real estate is a bad investment option for you because you don’t want to own and maintain real estate — and face the risks that come with that, such as having to deal with repairs. But in fact, branching out into real estate can be a good way to get some diversity in your portfolio. And you can do this without having physical properties.
Real estate investment trusts, or REITs, are companies that own and manage various properties, whether they are business centers, warehouses, or data centers. Like stocks, many REITs are publicly traded on major exchanges, so it’s easy to keep track of their stock prices.
REITs are, to a large extent, a safer investment than owning physical real estate because they offer greater liquidity. You can sell a REIT faster than you can complete a home sale. And because REITs tend to pay higher dividends than most stocks, it’s also a good way to secure a steady income stream that you can use or reinvest.
Make it a good year
If your goal is to do well as an investor in 2022, it pays to prepare for the stock market crash, deal lightly with cryptocurrency, and consider branching out into real estate. These resolutions can tell the difference between a successful year and a disappointing one.