Best Investment Plans in 2023

Investing can help you meet your financial goals, whether that’s saving for retirement or purchasing a home. However, each investment comes with a risk. It’s important to consider your risk tolerance and time horizon when choosing your investments.

Luckily, there are many different ways to invest, from safe choices like CDs and money market accounts to high-risk options like stocks and real estate.

1. Dollar-Cost-Averaging

Dollar-cost averaging is ideal for investors who don’t have tons of money to invest right away, have a low-risk tolerance or want to avoid trying to predict the market’s short-term ups and downs. It allows them to buy more shares when prices are lower and fewer when prices are higher, reducing their overall cost per share.

This strategy is especially effective for those who invest in mutual funds or exchange-traded funds (ETFs). Buying stocks on a regular basis, like every first day of the month, means you will be investing in them regardless of what their price does.

A good online brokerage can help you set up an automatic buying plan. You can also try to find one with excellent customer service and educational tools that will help you make the most of your investment portfolio. When choosing an automated plan, be sure it fits your budget and schedule well, so that you’re able to stick to it even when the markets are volatile.

2. Value Stocks

In 2023, it’s impossible to know if the Fed will raise interest rates, inflation will rebound or the economy will strengthen. As a result, it’s wise to diversify your investments with long- and short-term assets to provide income, safety and growth opportunities.

Growth stocks dominated in 2022, but they’re trading at expensive valuations compared to value companies. That could spell trouble in the future, particularly because history shows that value stocks tend to outperform growth over multiyear periods.

That makes it an ideal time to consider buying some of the best value stocks of 2023, such as Procter & Gamble (PG), which offers reliable dividends and consistently grows its payout each year. That consistent growth is a key attribute for long-term investors and can offset any temporary market weakness. For more conservative investors, high-yield savings accounts offer safe income with the potential to grow even if interest rates rise. It’s important to understand your risk tolerance and investment goals to help determine which assets are right for you.

3. Short-Term Bond Funds

With interest rates rising, financial advisors seeking to put their clients’ idle cash to work are looking for options beyond traditional savings accounts. Increasingly, they’re turning to short-term bond funds.

Unlike individual stocks, which can offer both big returns and large losses, bonds are low-risk investments that pay a fixed amount of interest on an annual basis until they reach their maturity date. Short-term bond funds like the iShares 0-3 Month Treasury Bond ETF (SGOV) and the SPDR Portfolio Short-Term Corporate Bond ETF (CYLRX) invest in government-backed securities, so they are among the safest investments available.

Investors in these funds can expect a high level of income that is often tax-deductible. But it’s important to choose the right fund. Avoid funds that charge too much in fees, since they can eat into your return potential. Instead, select funds that receive Morningstar’s Gold Rating for low expenses. This means they are among the best investments to consider.

4. Rental Properties

A rental property can provide a steady stream of income that can help offset inflation and combat interest rates. However, it can be difficult to find and manage a rental property. If you’re looking to diversify your portfolio but don’t want to take on the hassle of buying and maintaining a property, you can invest in real estate investment trusts (REITs). These stocks are owned by companies that own, operate, or finance income-producing properties that pass through the rent, operating expenses, or interest payments directly to shareholders as dividends. You can buy REITs using taxable brokerage accounts or tax-advantaged retirement accounts like workplace 401(k)s and IRAs.

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