New year, new you… new investment returns?
That’s always my wish when the clock strikes midnight on Jan. 1. I kid you not: This year I wasn’t watching the ball drop, I was hunting around my email inbox to figure out the password for an old pension account. (I haven’t found it yet.)
While I hope most people are less manic than I am, I do know that many mark the new year by reevaluating their investments. That’s why this week I want to highlight my colleagues’ latest “Where to Invest” installment. They asked five money managers for the best places to put $1 million right now. Even if you don’t have that much to invest — I don’t, yet — the ideas are illuminating.
My takeaway: If they build it, you could profit.
That’s because so many of the investment advisers focused on infrastructure in some way — and not in ways you might expect.
On the traditional side of things, Michael Harris of Verdence Capital Advisors says his firm has been encouraging clients to invest in infrastructure — think roads, bridges and utilities — because of its low correlation with traditional assets. “There is a very real possibility that recent significant monetary easing by global central banks may lead to a longer period of inflation,” he said. “And since infrastructure is recognized as a real asset, it may serve as an inflation hedge.”
But infrastructure as we know it is changing. For one thing, it’s digitizing. So Ophelia Snyder of 21Shares and Amun Tokens recommends investing in the infrastructure of the metaverse. Her picks include tokens like Sandbox (SAND), Decentraland (MANA) and NFTs for things like land or characters inside of some of these metaverse environments.
“The returns on these assets have been very, very steep,” Snyder writes. “These are very high-volatility products, but they are longer-term technical bets. This is like investing in early Internet protocols.”
Too volatile for you? Fine. Maybe you’ll feel more comfortable with an asset that can’t get much realer: property. Those envisioning 2022 as a calmer year for U.S. real estate are misguided, according to new findings from Zillow, which estimates that growth in home values will exceed 14% nationally through November. The hottest market? Tampa.
And for the stock pickers in the audience, you’ll be intrigued to know that fund managers are expecting cheap stocks to finally have their day in 2022.
For an even more expansive view, Bloomberg has collated and condensed the key views from dozens of investment outlooks, presenting more than 500 of them here is an incredibly helpful tool.
As always, I’m keen to answer your investing questions for the year ahead. So as you plot out your next portfolio moves, remember you can always email me, and I’ll do my best to get your questions answered by a financial expert. Our lines are open. – Charlie Wells
- Omicron cases are hitting highs, but new data is putting an end in sight.
- Opinion: The U.S. housing crisis only gets worse as the population shrinks.
- Hawaii is rethinking tourism. What does that mean for you?
- What really happens when workers are given a flexible hybrid schedule?
- Billionaires are embracing crypto in case money “goes to hell.”
- Extreme bidding wars are raging in one of the world’s riskiest housing markets.
- The children of secretive Singapore tycoons want to create an NFT club.
While Covid-era disruptions have been the primary trigger of the rapid price increases, a long-delayed, demographics-driven shift in spending is also under way. The pandemic was a watershed moment. Millennials flush with savings or simply desperate for space finally started making long-term acquisitions. One question may be whether millennials really have more money to spend, or whether they simply feel wealthier after two years of spectacular paper gains.
Read her full argument here.
You Ask, We Answer
I am a 50-year-old travel nurse with no 401(k). Can I get a 401(k) without a full-time job, or do I have to stick with a Roth? — Margaret Kreps, Orlando, Florida
If you see a number in front of the name (401K, 403B, 457), think “employer plan.” If you see letters in front (IRA, ROTH IRA, SEP IRA) think “individual plan.” If you don’t have access to an employer plan, you can use an individual. The most common is an IRA or a ROTH IRA. The maximum you can contribute in 2021 is $6,000 ($7,000 if over 50). Self-employed workers can use a SEP-IRA, which is sort of a hybrid employer/individual plan. The contributions are deductible on your taxes up to a limit as high as $58,000, but not greater than 25% of total self-employment income. This is a great way for contractors and gig workers to maximize retirement savings. For all accounts, if you make pre-tax contributions, you get a tax break this year, but pay taxes when you take distributions. If you make ROTH contributions, you forgo the tax break this year, but can have tax-free distributions. — Elliot Pepper, financial planner and director of tax, Northbrook Financial