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Май 2023

Best Long Term Investments To Add To Your Portfolio in 2023

2022 was a rough year for investors. But that year is in the rearview mirror, and it’s time to focus on the best long-term investments for 2023.

Many investors watched https://www.tencon2022.org/ their portfolios decline last year. Maybe you were one of them, but that doesn’t need to be the case in 2023. That’s because when you invest for the long term, the short-term declines become less important.

But that never means throwing caution to the wind. With the uncertainty that still grips the financial markets, it’s important to settle on the right mix of investments to maximize growth in your portfolio.

What to invest in right now for the long term

There are dozens of potential investments for you to hold in your portfolio. But it’s more important to select a small number likely to produce the best returns.

1. Exchange Traded Funds (ETFs)

ETFs have grown to become one of the most popular investments. Not only does each one enable you to invest in a diversified portfolio of securities, but funds are available that cover hundreds of different asset classes.

Unlike mutual funds, ETFs can be traded just like stocks and purchased for the price of a single share or less. That makes it easy to diversify your portfolio with even a small amount of money. J.P. Morgan Self-Directed Investing Platform can give you the tools to help you evaluate the best choices.

J.P. Morgan Self Directed Investing

“I would suggest that people with a long-term time horizon invest in diversified, low-fee index funds,” recommends Robert R. Johnson, Ph.D., CFA, CAIA, Professor of Finance, Heider College of Business, Creighton University. “From 1926 through 2022, according to Ibbotson Associates, the compound annual rate of return of a diversified portfolio of large stocks (the S&P 500) was 10.3%.”

That’s an example of the returns in the general stock market. Specific sectors can have even higher yields.

“Investing in a diversified basket of small stocks provides even greater returns,” continues Johnson. “The compound annual rate of return of a basket of small stocks over those 95 years according to Ibbotson Associates was 11.9%.”

2. Dividend Stocks

Dividend stocks are among the best stocks to buy now. A big reason is they have a history of weathering stormy markets better than other stocks, like growth stocks.

“Given the current macroeconomic uncertainty, dividend-paying blue chip stocks are the preferred choice for this year,” advises Sam Boughedda, Equities Trader and Lead Stock Market News Writer at AskTraders.com. “They provide investors with a potential return on their investment in an unstable market. Well-known, high-quality companies provide some stability in the current unstable environment, with companies such as Apple, Mastercard, Visa, and Walmart being some of the better choices, in our opinion.”

You can do this by investing in a class of dividend stocks known as the Dividend Aristocrats. This is a group of more than 60 companies that are part of the S&P 500 and have produced at least 25 consecutive years of dividend increases.

3. Short-term Bonds

Historically, long-term bonds have provided higher interest than short-term bonds. But that’s not the case in 2023.

The table below shows the yield on US Treasury securities for the month of October, through the 23rd.

Notice that the latest return on a two-year Treasury note (5.57%) is slightly higher than that of the 30-year Treasury bond, at 5.01%. The range on all shorter-term securities, ranging from one month to two years, is higher than the yield on both the 30-year bond and the 10-year note.

This is what is known as an inverted yield curve. It’s not a common situation, but it is the current order of the day. And it favors investing in short-term bonds over the long-term variety.

“We can examine the yield curve about market expectations and use that information to improve our odds of a higher-than-market total return,” says John Cunnison, CFA and VP/Chief Investment Officer at Baker Boyer National Bank. “Currently, the yield is inverted, and that suggests that we are not being paid enough to own longer bonds. We accept a discount for owning longer bonds. For that reason, you should keep your duration on the shorter side of normal.”

4. Real Estate

Real estate is always competing with the stock market as the best long-term investment vehicle. In 2023, that competition shows no signs of changing anytime soon.

You can invest in individual properties, but that does require both a large amount of capital and hands-on management.

A much simpler way, and one that fits better within a portfolio, is to invest through real estate crowdfunding platforms.

“Historically, real estate has always been the best-performing asset class,” notes Patrick Donoghue, Vice President, Market Risk at Groundfloor Finance. “One of the best ways to invest is through private capital real estate deals. We’ve seen consistent 10% annualized returns across our portfolio. With fractional real estate investing, you can invest $10,000 at $100 each into 100 different projects and be well-diversified.”

Real estate crowdfunding platforms are a way to invest in property while getting the benefit of professional property management.

5. Alternative Assets

This category of investment assets has been growing in recent years. As it has, more opportunities have arisen for small investors to participate.

In general, alternative assets take in investments beyond stocks, real estate, funds, bonds, and other fixed-income assets. It can include private equity, fractional ownership of real property, precious metals, cryptocurrencies, and other assets.

“Our thesis is that the historical 60/40 equity/bond allocation is no longer a viable strategy,” advises Milind Mehere, Founder & Chief Executive Officer at Yieldstreet. “Increased correlations across assets and sectors lead to boom/bust outcomes. We recommend enhanced diversification through alternative investments, which provide reduced correlation and increased return potential in a modern portfolio of, say 40/30/30 equities, bonds, and alternatives, respectively. This modern portfolio is more accessible to investors than ever, including the ability to invest in alternative asset classes (such as real estate, private credit, and private equity) within tax-advantaged accounts.”