Summer usually means vacations, but if you’re using the time to stay on top of your financial game, July offers many areas for making gains. The residential real estate market is scorching under the summer sun, and the Internet of Things is a shining star when it comes to market winnings. If you’re new to investing, use these tips to make some smart money moves this summer.
A Red Hot Housing Market
The residential real estate market is often an indicator of the overall health of the economy. Homeownership is a sign of aspiration and success in fulfilling the American dream; the single largest purchase that most Americans will make in their life is their home. The majority of Americans — 63.6 percent, to be exact — are homeowners. In Q4 2016, real estate contributed more than 15 percent to the gross domestic product (GDP), according to the National Association of Home Builders (NAHB).
A strong real estate market leads to fortuitous opportunities for investors. Residential real estate has recovered from the 2008 crash, unemployment and mortgage rates are both low, and the oldest of the millennials are aging into their 30s and buying homes. All of these factors mean that the market is expected to be booming throughout the summer.
Inventory is low, which means prices are on the rise. According to Zillow, the national median listing price for a home was $250,000 in May 2017. United States home values have gone up 7.3 percent over the past year, and the trend is expected to continue throughout the next year.
Investors have several ways to capitalize on the strong market. You can purchase property and become a landlord, which will provide you with equity and rental income. If managing property isn’t for you, you can “flip” a home — this means buying a run-down or bank-owned property, renovating it and selling it for a profit.
The least laborious way to invest in real estate is to purchase shares of a Real Estate Investment Trust (REIT). These funds are portfolios of large-scale properties, which trade on the market like stocks.
Find Out: The Worst Real Estate Investing Mistakes
The Internet of Things
It’s tough to go through a typical day and not use or encounter something — a personal gadget, appliance or system — that doesn’t fall under the umbrella of the Internet of Things (IoT). It’s a hot topic this summer, and will be on investors’ minds during the IoT Evolution Expo, taking place in Las Vegas, Nev., from July 17 to July 20.
According to McKinsey, the total IoT market size in 2015 was estimated to be $900 million and will grow to $3.7 billion by 2020. What encompasses the IoT? Pretty much anything that contains a chip, which is used to collect, communicate and transfer data. These are devices that communicate with each other to create a more connected world, whether that is the ability to see what’s in your refrigerator when you’re not at home, track inventory in a retail establishment or monitor energy management systems.
The IoT industry can make for lucrative investments, if done correctly. There are many publicly traded companies that will benefit from the technological advances of IoT, including consumer products, telecommunications, manufacturing and transportation.
Consider studying the market and choosing a focused path, such as a particular industry or demographic within the IoT. You can invest in a single company that is benefiting from the IoT, such as Apple, Amazon or GE. Alternatively, you can purchase shares of a group of companies through an ETF, or an exchange-traded fund.
Merge and Acquire
In one of the more interesting mergers of the summer, it was announced in mid-June that Amazon will buy Whole Foods for $13.7 billion, or $42 per share, in an all-cash transaction. The acquisition will allow Amazon to fulfill its goal of moving into the grocery arena. The deal is expected to progress throughout the summer.
A common occurrence in corporate finance, mergers and acquisitions help companies to expand or gain a larger market share, while usually increasing their cash flow. Stockholders can become nervous when mergers happen since they usually lead to a period of change within the corporate structure. Ultimately, an M&A can boost the strength and stock value of the companies that are involved.
The Amazon-Whole Foods deal initially caused grocery stocks to take a tumble, as investors worried about the fate of grocery stores. It’s a legitimate worry, considering Amazon’s effect on booksellers and retail. Both Amazon and Whole Foods shares have been up in the first half of 2017.
Big Name Retailers
Amazon has cornered the market on online sales, and retailers are scrambling to stay in the game. Long-term prospects for large physical retailers like Walmart and Target depend largely on their ability to capitalize their online presence while transforming their physical stores to align with shopper’s current needs.
Walmart and Target have attempted to keep their physical spaces relevant by redesigning stores and expanding services that focus on online order pickups, delivery and returns. Both companies have also partnered with hot-selling retail brands and websites — Target with Casper, a mattress and bedding company popular with millennials, and Walmart with e-commerce startup Jet.
Specialty products also help to boost interest and sales. Walmart is betting on the release of flashlight sneakers, which will hit shelves in July 2017. Available in grey, white, black and glittery pink, the shoes connect via USB port to a phone or computer. Blue, green and purple lights flash for up to eight hours.
All of these factors have an impact on the share price and help investors determine the best stocks to purchase. Amazon is the strongest of the retailer stocks and likely to remain that way for some time. However, the cost of the company’s stock, which sits about $990 per share, can be pricey for the beginning investor. Comparably, Target is around $50 per share and Walmart is about $75 per share, which is much more affordable.
Secure Venture Capitalism
While venture capitalism (VC) might be down for most industries, one area where angel funding is still thriving is in the cybersecurity space. The more the IoT expands, the greater need there will be to keep our equipment, personal information and privacy secure. So far, the industry is falling behind, as was evident during the WannaCry ransomware attack in May 2017.
The Department of Homeland Security is holding its largest cybersecurity research and development (R&D) event July 11-13 this year. The 2017 Cyber Security R&D Showcase and Technical Workshop is open to public and private sector cybersecurity professionals, with 60 researchers on hand to discuss their security projects.
VC investing does require a significant amount of wealth to participate. If you have the cash and are looking for a thriving industry within the funding realm, then cybersecurity might be right for you. Before signing any checks, do your research to learn who the top players are within the industry. Make sure the company has a solid foundation, which might include experienced founders, proper money management and a realistic business plan.
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