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If you’re wanting to make some smart financial moves this year that will increase your bottom line but you’re unsure of what to do, there’s no better resource than an industry expert.
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Invest in Growth Stocks
Mark Reimet, certified financial planner at Ocean City Financial Group, said growth stocks represent companies with high potential but they might carry higher volatility and risk.
“By investing in carefully selected growth stocks, you can potentially achieve significant returns over the long term,” he said. “The advantages of this risk include the potential for capital appreciation and the opportunity to outperform the broader market. However, it’s essential to conduct thorough research and diversify your investments to mitigate potential losses.”
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Consider Venture Capital Investments
“Venture capital (VC) investments involve funding early-stage startups in exchange for equity,” Reimet said. “While VC investments carry a higher risk due to the uncertain nature of startups, they offer substantial potential for significant returns. By identifying promising startups and investing in them at an early stage, you can participate in their growth and potentially enjoy substantial profits if they succeed.
“The advantages include the potential for substantial financial gains and the satisfaction of supporting innovative businesses. However, it’s crucial to diversify your VC investments and have a high-risk tolerance due to the possibility of startup failures.”
Consider Real Estate Investments
Reimet said investing in real estate — whether through rental properties, commercial properties or real estate investment trusts (REITs) — involves risks but also offers various advantages.
“Real estate investments have the potential for long-term appreciation, rental income and tax benefits,” he said. “Additionally, real estate can act as a hedge against inflation. However, it’s crucial to consider factors like property market conditions, location and cash flow analysis to make informed decisions and mitigate risks associated with vacancies, property management or market downturns.”
Start a Business
“Starting your own business involves risks, but it can also lead to significant rewards,” Reimet said. “By leveraging your skills, expertise and passion, you have the opportunity to create a successful venture that generates substantial income and builds long-term wealth.
“Advantages include being your own boss, unlimited earning potential and the ability to control your financial destiny. However, it’s essential to thoroughly research your market, create a comprehensive business plan and be prepared for the challenges and uncertainties that come with entrepreneurship.”
Invest in US T-bills
“At the low end of the risk spectrum, one-year US Treasury bills offer an outstanding risk-free return of 5.3%,” said Thomas Samuelson, CFA, CMT, chief investment officer at Vineyard Global Advisors. “This rate offers a real rate of return of 3.5% as compared to the market’s current one-year inflation expectation of 1.83%.
“Given the minimal risk involved, we believe Treasury bills should play a role in most investors’ portfolios at the present time by allowing them to take advantage of high short-term rates, which may stay high longer than the market currently expects. An investor can buy them through Treasury Direct.”
Invest in Emerging Markets Equities
“At the other end of the risk spectrum,” Samuelson said, “emerging market equities are cheap and appear to be bottoming technically. The MSCI emerging markets index is currently selling at only 13 and 11 times 2023 and 2024 earnings estimates, respectively, toward the lower end of its 17-year range and close to the cheapest level versus U.S. stocks in close to 25 years.
“An investor can buy the emerging markets in a single share through an exchange traded fund (ETF) such as EEM or VWO.”
Invest in Artificial Intelligence
“The launch of ChatGPT in November 2022 raised investor awareness of the transformational power of artificial intelligence,” Samuelson said. “There are many publicly traded companies that will benefit from the multi-year AI investment cycle, which is expected to grow from $67 billion this year to $1.3 trillion over the next nine years — a compound annual growth rate of 39%.
“While many of these stocks have had strong runs already, investors might consider adding AI exposure on pullbacks if they have a time horizon of 5-plus years. There are several ETFs that own a basket of companies with AI exposure, including AIQ, ARKQ, BOTZ, IRBO.”
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