We get it. The new year has come and we’re all rearing to go. But (isn’t there always one?), – and we don’t want to kill your enthusiasm, you must know what you’re in for before you head into the world of investing. It simply isn’t as it used to be – and perhaps it’s about time. Now, anyone can play the markets from home and the rise in online investing platforms speaks to this – but be careful. Know what you’re getting yourself into.
With all of that out of the way, we’ve prepared a few thoughts for you to unpack as we head into 2022. We have all learned (and some of us the hard way), how important it is to create passive or alternative income streams, and also to create and preserve wealth. But, not all of us are born with this knowledge or skill, in fact – none of us are. We just get better at it, so if you’re thinking along these lines, Prio wealth management can offer expert advice and guidance to help get you started.
HERE’S WHAT YOU NEED TO KNOW, FIRST.
There is no getting around it – the pandemic is going to be influencing the way stocks and markets work for the foreseeable future. Now, markest are expressing some hope that 2022 will see a new wind blowing, but that remains to be seen. We’ve already seen massive upheavals to travel and real estate – and the year hasn’t even started in full form yet.
The emergence of Omicron is presenting both long-term and short-term worries, even though data from South Africa, where the variant was first discovered, has shown it to be no more severe than a moderate cold. But this means that whatever type of investing we’re planning on doing this year, we have to be smart about it.
THE LIKELIHOOD OF INTEREST RATES HIKES
When the Federal Reserve, or ‘The Fed’, keeps interest rates low, stocks tend to do rather well. However, the Fed’s zero interest rate policy days, are well and truly over. The single most important question that investors should be asking themselves is how many Fed rate hikes will happen this year.
INFLATION: IT WILL GET WORSE
We are so sick of talking about it and yet the media (and your neighbor) seems to want to talk about nothing else. But here is the horrible truth – inflation is going to get worse before it gets better. We can no longer dismiss high gas prices and supply-chain-related shortages quite as casually as have done.
According to the financial publication, Forbes: “The course of inflation is going to be an even bigger story in 2022, and if the current trends aren’t reversed soon, there’s going to be market turmoil.”
Something of a crystal ball, although we hate that analogy, are FAANG stocks. Now, if you don’t know what that means, here we go:
Facebook, Amazon, Apple, Netflix, and Google (actually, that’s Alphabet the parent company, but the G works better in the acronym), and at times, these stocks are referred to as FAAMG stocks when Netflix and Microsoft are used interchangeably.
All predictions are that this year, these stocks will see a cooling that was initially thought of in 2021. But then it didn’t and they did rather well, so beware – not all predictions come true. The point? Check your appetite for risk in volatile markets, and get the right advice.
Overall, it’s going to be an interesting year, that’s for sure. Check yourself and remember that nothing trumps skill and experience, so find the right partners.