Going into 2016, you want to look for the best investments possible. We’re going to be covering not only practical approaches to investing this coming year, but also a few industries that have a positive outlook for the coming year.
1. Invest in Yourself
The best investment that you can make is in yourself. Not only does this mean obtaining higher education or advancing your career, but it also means that you want to pay off your debt. Paying off debt should come before investing any money in 2016.
If you have credit cards that have 10% interest rate or more, you want to pay these off before investing in the markets. Why? You may not earn a 10% return on your investment in the market, but maintaining credit card debt will cause you to suffer a net loss. Unless your investment returns outweigh the loss by credit card interest, the smart choice to pay off debt as fast as possible.
2. Invest in an Index Fund
If you want to invest smartly, an index fund is a good choice. Unless you have the time and experience with selecting stocks and mutual funds, it’s best to invest in an index fund, such as the Vanguard Total Stock Market ETF (NYSEMKT:VTI).
These ETFs will distribute your assets across a variety of different assets.
The VTI covers the entire US market, while the Vanguard Total World Stock ETF ((NYSEMKT:VT) divides your assets across the entire stock market across the world.
3. Top Stock Picks
You always want to keep a close eye on the top stock picks going into the year. There are a variety of different stocks to choose from, and USA Today ran a great piece earlier in the month from some of the sharpest investor minds in the world. This piece discussed several different stocks that are recommended going into 2016.
Which stocks were listed?
- Goldman Sachs (GS)
- Alphabet (GOOG)
- Starbucks (SBUX)
- Wells Fargo (WFC)
- Southwest Airlines (LUV)
- Footlocker (FL)
- Tesla (TSLA)
- Trip Advisor (TRIP)
- Facebook (FB)
These stocks range across a variety of different markets and sectors, but they are all projected to increase in price in the coming year. Tesla is doing very well with their electric vehicles, and Facebook has shown that the social media company has immense advertising potential.
With falling currency prices around the world, Trip Advisor and Southwest Airlines will also be witnessing an uptick in revenue as more people are able to travel outside of the United States.
4. Growing Sectors
Several stock market sectors have grown and contracted this year. The biggest gains this year, according to Charles Schwab, are:
- Consumer Discretionary: 13.05% YTD return
- Consumer Staples: 5.72% YTD return
- Healthcare: 5.66% YTD return
- Information Technology: 9.25% YTD return
If you’re struggling looking for the best investment of 2016, look for stocks that fit into these growing sectors.
5. Invest in the USD
The US dollar has been performing exceptionally this year. Not only has the US dollar closed the gap between the euro, but the current condition with the Federal Reserve and the European Central Bank is expected to impact the USD.
Falling commodity prices have shown to increase the strength of the greenback, and rising interest rates also factor into a stronger dollar.