3 Investments You Should Have in Your Portfolio and 1 To Avoid, According to Investors
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Gabrielle Olya
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Molly Sullivan
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A little less than half of all Americans (43%) are investing outside of a 401(k) account — but where are these investors putting their money? A new survey from Finder and Tastytrade revealed the assets active investors are favoring right now.
According to the survey, there are three assets investors believe you should be investing in right now, and one to avoid.
75% of Investors Said Now Is a Good Time To Buy Stocks
Investors are favoring stocks right now, with two-thirds stating that now is a good time to invest in this asset. The survey also found that 64% of investors currently hold stocks — more than any other type of investment.
“If you have a long time horizon, such as needing to spend your investments more than 10 years in the future, it’s always a good time to purchase a diversified stock portfolio, such as index or broad market exchange-traded funds,” said Laura Adams, money expert and MBA. “For instance, over long periods, the historical average annual return of the S&P 500 index is about 10%.”
65% of Investors Said Now Is a Good Time To Invest In a High-Interest Savings Account
Despite recent interest rate cuts, the majority of investors believe that it’s a good idea to put money in a high-interest savings account.
“If you have a short time horizon, such as needing to spend money in a year or two for emergencies or specific goals, you should always keep it safe in an FDIC-insured high-interest savings account,” Adams said.
65% of Investors Said Now Is a Good Time To Invest In Commodities
Commodities like oil and gold can add some diversity to your portfolio, and most investors are in favor of utilizing these alternative assets. However, investing in commodities may not be the right choice for every investor.
“Commodities are sophisticated investments that are not appropriate for average investors,” Adams said. “The price of commodities, like gold, oil and corn, can be highly volatile and are driven by complex factors, including supply, demand, geopolitical events and weather.
“Investing in physical goods directly or through futures contracts can diversify your portfolio; however, it requires deep knowledge of global markets and economic indicators, which is expertise the average investor typically doesn’t have or want.”
Adams recommends investing in commodities ETFs instead.
“Experienced investors with access to and understanding of physical and futures markets could speculate on commodities,” she said. “However, purchasing a commodity ETF makes it easier to gain exposure to a portfolio of commodities with less risk than trading futures or directly purchasing physical assets, like precious metals. Consider limiting commodities to a small portion of your overall portfolio, such as no more than 5%.”
69% of Investors Said That Now Is a Bad Time To Invest in Forex
The majority of investors believe that forex is not a good investment at this time.
“The foreign exchange market, known as forex (FX), is where currencies get traded for others in pairs,” Adams said. “The exchange rate between pairs, such as the dollar and the euro, is determined by complex factors, including supply, demand, news and geopolitical events. Traders must understand many forex concepts and have access to real-time pricing information and chart analysis, which is expertise the average investor typically doesn’t have or want.”
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