Archive for the ‘ETFs’ tag
Best Investments for a Turbulent Market
The ideal investments for 2011 continue to change as the market develops in response to macro-economic and political conditions in the USA and the rest of the world.
An informed investor can still “beat” the market despite its machinations and regardless of what the “talking heads” on the T. V. seem to suggest. However, such lofty targets are made tricky because there are so many different investing options.
Mutual Funds/Stock ETFs
Mutual Funds should generally be ignored. They are “managed” with the goal of beating market averages – but few succeed at this goal and the ones that do succeed rarely do so with consistency over time. ETFs aren’t managed and are usually based on the averages that Mutual Funds target. As an example, making an investment in the SPY ETF provides instant diversification by exposing the investor to the S&P 500. ETFs usually have lower expenses and are simple to sell and buy. Caution should be used when making an investment in stocks during downward cycles.
Gold/Silver
During market problems, Gold can often be attractive and offer price appreciation when other investment classes are failing. Gold regularly performs best during high periods of inflation. Silver regularly tracks with Gold though there are times when Silver outpaces Gold or when Gold outpaces Silver. The ETF that tracks Gold is GLD and the ETF that tracks Silver is SLV.
Real Estate
Real Estate continues to be vexing for investors. Historically real estate is categorized as a good investment when rents are higher than owning. But with uncertainty so high fewer potential investors feel at ease in taking the plunge even with home prices as low as they are. A good option for participating in Real Estate without owning it directly is to take a position in the IYR which is an ETF primarily based on the Dow US Real-estate index.
Bonds
There are several different kinds of bonds one can invest in. Local, State, Federal, Corporate. U.S. Treasures are bonds sold by the Federal government and are backed by the full faith and credit of the U.S.. These are thought to be one of the safest types of investments in the world. Bonds work far differently than stocks and can be tricky to understand. There are many great ETFs including SHY, IEF, and TLT that provide investors exposure to bonds without the difficulties of directly buying bonds. Bonds can be a superb place to park capital in uncertain times.
Which is Right?
With so many different investments available, the “right” investment will depend greatly on your personal goals and your time-horizon for when you’ll need access to your funds. With appropriate market timing information a savvy investor can modify their investments to meet current market conditions helping the investor to increase net profits while managing risks.
Be cautious, any investment activity bears risk. Bubbles can form in any asset class and create turmoil. Always be watchful and look out for changes in fundamental economic conditions. When you see the need to make changes, do so with clarity and save yourself from significant decreases in your portfolio size.
About the Writer
John Larsen is President and Chief Analyist of AmplifiedFinancial. For more insights on markets and economic conditions, please visit Point of View.
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