The sudden onset of COVID in 2020 and its abatement two years later created a slew of market imbalances that caused changes in investment trends, signaling a paradigm shift. Investors are preparing to change their investment strategies going forward, at least in the near term. From potential disruptors like artificial intelligence to investment mainstays like real estate, here are some future investment trends to watch out for in 2022:
According to data from the United States Labor Department, the USA has recorded an inflation rate so high in 2022 that it hasn’t been seen since 1981. Compared to 2021, the consumer price index has increased by nearly nine percent, and these projections are expected to rise at least through the end of next year.
Investors are seeking a safeguard against this faster-than-expected rise in inflation. Inflation hedges are one of the best solutions to counteract this inflationary effect. Examples of inflation hedges include gold, commodities, and stocks.
Gold is one of the most well-known and one of the safest alternatives against inflation. It is a tangible asset that tends to appreciate even when the dollar's value falls. Investing in gold is possible in a variety of ways. Purchasing physical gold assets, such as bullion, is the most straightforward option. One can also invest in gold ETFs and mutual funds, or purchase gold mining company stocks. Besides gold, stocks with high pricing power provide a good long-term valuation.
Another alternative is treasury inflation-protected securities (TIPS). This is a fixed-income product sold by the US Treasury that provides returns after a specified maturity period. With a low volatility index, it is one of the more solid alternatives in which to invest.
Artificial intelligence entered the market with features such as marketing chatbots and voice-assisted technology. Today, it has seen exponential growth across industry verticals. This has resulted in a global economic transformation unlike any other that will possibly dictate new investment trends.
More brands and enterprises are experimenting with machine learning concepts. They're capitalizing on the AI boom to improve their products and services. Amazon, Apple, IBM, and Nvidia are some of the companies at the forefront of this AI-powered revolution.
According to a research report by Grand View Research, AI is expected to accelerate at a compound annual growth rate of 38.1% over the next eight years. This will influence and impact future investment trends in the market.
Potential investors can diversify their portfolios by focusing on AI stocks such as C3.ai, Inc., IBM, and Palantir Technologies. Those unsure about investing in individual AI company stocks can test the waters with AI-centric ETFs. This will allow them to invest in a broader pool of top AI talent.
Metaverse is associated with virtual reality and is yet another revolutionary concept in the investment space. Experts believe it is still in its early stages, but its profitability forecast appears promising. According to data, the metaverse market is expected to grow at a 39.1% CAGR by 2030. This will significantly impact investing trends in the years to come.
Facebook, aka Meta, was one of the first companies to make the transition to becoming a metaverse company. Since then, several global corporations have applied for metaverse trademarks. This includes Formula One, Nike, Hermes, and Converse. The United States Patent and Trademark Office received over 4000 metaverse trademark applications from global brands this year alone.
So, How Can One invest in a Virtual Reality Realm?
Non-fungible tokens (NFTs) are one of the most common ways to invest in the metaverse space. Some popular metaverse NFTs include Decentraland and Battle Infinity. Investing in metaverse crypto is also an excellent way to generate passive income.
Real estate investment is a good option to generate long-term wealth. It also serves as a safe hedge against risk and inflation
Also, when it comes to real estate investment, it doesn’t simply mean purchasing a tangible real estate property. Instead, for a high ROI with low risk, it is advisable to invest in a real estate investment trust (REIT). This is because, by law, REITs must distribute 90% of their taxable income to their shareholders.
However, not all REITs can make such claims. The ROI is primarily determined by the REIT category you select. This includes healthcare, residential properties, commercial properties, or retail properties. Other considerations include the payout ratio, management, and historical performance of the REIT. If you are unsure, it is best to invest in an REIT ETF or a mutual fund that will make sound investment decisions on your behalf.
ESG, short for Environmental, Social, and Governance, is an organizational strategy that involves incorporating environmental, social, and governance goals into its policies to create market value. Recently, numerous investors have expressed an interest in investing in such ethically responsible organizations. Several mutual funds and ETFs are including ESG-centric products in their offerings in line with this new investment trend.
The number of US investors holding ESG-focused assets has increased by 42% since 2018. This data was highlighted in the US SIF Foundation's Biennial Trends Report. This represents a steadily rising trend that has room to continue in the coming years.
The growth of the e-commerce sector skyrocketed during the course of the Covid pandemic. It provided an excellent opportunity for millions of people to shop from the safety and comfort of their homes. Global e-commerce retail sales for 2021 increased by almost 7% from 2019. According to market projections, the industry will be worth $5.4 trillion by 2026. E-commerce also accounts for a staggering 13% of retail sales. This is indicative of a more profound behavioral shift that is here to stay.
There are no shortage of investment options to choose from in the post-pandemic era. However, it is clear that digital offerings and innovations will significantly impact future investment trends.
Investing smartly lies at the crux of creating long-term investments that can survive volatile trends. Precious metals, such as gold and silver, have historically survived market volatility. With a storied legacy of coin collecting that spans three decades, BOLD Precious Metals has established itself as a reliable seller of precious metals and coins. BOLD provides a diverse selection of gold, silver, and precious collectible coins from top mints around the world at the lowest prices online to diversify and strengthen your investment portfolio. Customers can purchase everything from bars to coins to rounds. Whether you are a serious investor or a collector, purchasing from BOLD Precious Metals will add to your financial security.
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