Dear long-term investor, a new year is dawning with new opportunities. This brings us to the question: what is the best thing to invest in? In this comprehensive article, we cover the best investments for advanced and novice investors. Here you will find inspiration for the best stock investing. Like the best S&P 500 stocks and best oil stocks at the moment. We also look at good investment opportunities in crypto, NFT, ETFs and commodities.
In short, here's the answer to what's best for investing in 2022.
Table of Contents
- Where best to invest in: Equities
- Where best to invest: Real estate with little money
- Where best to invest in Crypto
- How best to invest in NFT?
- Where best to invest in ETF for 2022
- Where best to invest in Gold and Silver for 2022
- Where best to invest in oil for 2022
- Conclusion on the best investments for 2022
Where best to invest in: Equities
What is the best place to invest in stocks? There are plenty of opinions out there about the best stocks to invest in. My advice is to only invest in stocks you know. This means fully understanding how a company makes money, whether it is reliable and consistent, and what its future prospects are.
The best stock investing is timeless advice: work hard and do lots of research.
Over the past 7.5 years, I have had the opportunity to experiment a lot with stocks. Some very successful, others not at all. Even today, as I research stocks full time, I nevertheless have some growth stocks that are at -60%. A painful issue. This is partly time-related, but also partly inherent in risky growth stocks (especially in technology). They are harder to value and the market is far from rational. Sometimes growth stocks go sky high, and sometimes they can be bought on the cheap. And that within a few months, while nothing fundamental about the company has changed.
An example of interesting growth stocks in 2022 are (no buy recommendation):
- Teladoc Health
Some have been allowed to experience large price declines in 2021, but this does not necessarily mean that it is a bargain. Also, growth companies have much more risk (like Teladoc Health). Nevertheless, it can be interesting to delve into this. After all, the market is anxious and pessimistic about growth stocks (underperformance, inflation, possible rise in interest rates). When the market is fearful, it can be interesting to invest.
However, there is a better investment in equities.
Now I ask you the question: what if you know with a high degree of certainty that you are investing money in a strong, profitable company that will grow in the future?
Wouldn't this provide a high degree of success?
The answer is: yes. And we find our answer in value stocks.
The best investment for long-term investors are value stocks
Value stocks have in common that we pay a favorable or cheap stock price for a company that will generate more value in the future. This is a broad term. Growth stocks can be value stocks, but they are more difficult to analyze. Also, they are more volatile because of news events (which explains why I am at -50% or +150% within three months with some stocks).
Where best to invest in stocks for 2022 and long term?
My tip: immerse yourself in value stocks. Buy strong companies with a sustainable competitive advantage at a favorable stock price, and hold for the long term (> 5 years).
I've had a lot of success with growth stocks in recent years. But as I get more advanced, I realize that following the best investors is a better choice. And they (almost all) invest in value stocks. Within my portfolio, I see value stocks growing more quietly, but more steadily. It's not necessarily a better investment than growth stocks in terms of returns, but it is in terms of "certainty" of positive returns.
The more money you have, the more important that certainty becomes.
Do you have smaller amounts and a long-term horizon (>20 years)? Then my tip would be to focus on value stocks with consistently high revenue and earnings growth. For larger amounts, you might also want to partially invest in value stocks with consistent (high dividend) growth.
Within the S&P 500, you can find excellent stocks for both "types". Let's look at 5 examples of S&P 500 stocks.
What are the best S&P 500 stocks right now?
What you can best invest in with S&P 500 stocks is person-specific. This depends on the risk profile, but also the preference to types of shares. For example, I have a bias. My preference is in technology stocks, because they achieve a higher average Return on Equity (ROE) than non-technology companies. The disadvantage of my bias is that potentially, it does not diversify enough. Another disadvantage is that technology stocks carry more risk.
Another well-known is the home bias. This means: mainly buying shares that are close to home. Many Dutch people look at the AEX. Although this contains a few fine shares, it is otherwise uninteresting. The American stock exchanges usually offer the best investments.
In summary two tips:
- What is your bias and how can it be covered?
- Don't just recruit the same people to your team, but bring variety (in terms of investing: stocks from different industries)
Let's look at the S&P 500. What could be the best S&P 500 stocks right now? The word "best" for now is for inspiration. There are many good stocks out there.
Five of the best S&P 500 stocks right now are (no buy recommendation):
- The Mosaic Company
- HP Inc (HPQ)
- Walt Disney Company
Why is it best to invest in these types of stocks? Because:
- Alphabet is a phenomenal company with an acceptable share price relative to its future earnings growth
- Mosaic Company, Abbvie, and HP Inc are good companies with a cheap stock price (and nice dividend)
- Walt Disney Company is a superior company
My preference is in value stocks with lots of growth (Alphabet). You also have value stocks based on cheap current price and slightly less future growth (Mosaic, Abbvie and HP).
Walt Disney Company is trickier to assess right now. Is it among the best S&P 500 stocks? As a long-term investment, I think so, but perhaps we can wait for a better entry point.
Usually patience is the long-term investor's best friend. Sometimes it isn't.
Now you may be thinking: why aren't Tesla and Nvidia among the best S&P 500 stocks? Unfortunately, both stocks are now overvalued. The companies are unique and strong (especially Nvidia), but the stock price is ridiculously high. The potential for loss or low returns is plausible.
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Where best to invest: Real estate with little money
Where is the best place to invest in real estate with little money? This is a typical stumbling block for novice real estate investors. For example, the best way (for high returns) is to buy physical real estate below its market value. Give it a little refurbishment, and then rent it out or sell it above market value.
This strategy gives the novice investor a challenge: seed capital.
Other changes for 2022 also make physical real estate a more difficult investment for beginners. For example, the transfer tax will increase from 2% to 8%. There will be restrictions in certain areas including Amsterdam (?). And house prices have recently risen very sharply.
What is the best place to invest in real estate when I have a small amount of money?
As a beginner, a safer start can be made thanks to real estate funds. There are listed and unlisted real estate funds. The latter gives some interesting advantages for beginners, namely:
- Relatively attractive dividend of about 4.5 - 8.5%
- No price fluctuations
- More spread of money (not one, but hundreds of real estate objects)
- Relatively passive income (no tenants, no hassle, etc.)
- Getting in with a small amount of money (from 100 euros)
Real estate funds are not the best investment in terms of return. For beginners, however, it is easy to start and spread the risk.
Now, where to start?
Start to compare real estate funds.
Where best to invest in Crypto
Besides stocks and real estate, there is the crypto market. Where is the best place to invest in crypto? This is a tricky question. What I can assure you is this: ignore Social Media. Ignore any kind of hype. And ignore emotional trading based on "Fear of Missing Out" (FOMO). Too many times and too many people lose money.
You only hear from the people who have made a lot of money in crypto.
And that's the other side of the story: even in 2022, high returns will still be possible with crypto currencies. The challenge is to determine what are the best crypto currencies now. On the Internet and Social Media, 95% are talking to each other. Parrots. But what do they really know about crypto projects? Only a few have much knowledge of crypto (I am deliberately not one of them, despite my first purchases in 2017. Equities are my preference).
Follow only the real crypto experts.
In the beginning of this article, I give you tips on value stocks. An investment strategy to increase the probability of success, simply because we increase the certainty (the known vs. unknown). Through a lot of research it can be determined whether a company is very likely to make more profit in the future. More profit means that today's stock price becomes cheaper and therefore price return arises.
A crypto currency does not make a profit. Indeed, how can we calculate what a crypto currency is really worth? Is it the cost of power consumption to mine? Or speculation that rising demand is increasing?
A few tips for crypto investing
So how best to invest in cryptocurrency? Tips:
- Invest up to 10% or less of your total assets in these risky assets
- Use a fixed strategy (HODL vs. trading)
- Always start with building a crypto portfolio
- Do you want to speculate maximally with small altcoins? Then choose asymmetric investing
- And the most important: only invest with money you can and want to lose 100%.
Again: on the Internet and Social Media you will find many lists of "the best crypto coins". Perhaps if everyone brings up the same ones (like Ethereum, Solana, Cardano, et cetera) there is some truth in it. But it's not comparable to stocks, where crypto is still speculation and not investing (unfortunately).
This does not have to be a bad thing. On the contrary, there are great opportunities for high returns here. As long as the extremely high risk of losing money is accepted. Wanting to get rich quick often leads to bad choices.
How best to invest in NFT?
A new variant in the world of crypto are NFTs. This stands for Non-Fungible Token. An NFT is based on smart contract. In this case, it is a unique link between a digital item and a blockchain. Thanks to this ingenious technology (which works on Ethereum), it is possible to make 100% traceable who is the rightful owner of a digital item. In other words: digital proof of ownership.
What is the best place to invest in with NFT?
Again, there is a lot of speculation here. Sensitively, I do find NFTs interesting because they involve digital property. Ownership is good. Property can increase in value over time.
In the world of NFTs, digital art is currently "the place to be." In my opinion, there is more logic to this than buying crypto coins. Investing in digital art can be lucrative. Right now, this is a fledgling market. And this means that there are still many chance items available. Yet people are buying this, in the speculation that they can sell it for a profit in the future. (Note: it's my interpretation that this is chance-free; I could be wrong).
Take OpenSea.io as an example. The largest NFT marketplace. Right now there are a lot of vague "pictures" for sale. Like the one from CryptoPunks:
CrytoPunk #4132 was bought in 2020 for 12.5 Ethereum. In 2021, it was sold for 75 Ethereum. The current Ethereum price tag stands at $4000. This record has realized $250,000 profit (62.5 * $4000).
Potentially, NFTs with digital art are interesting. Try to find quality. Avoid speculation.
How can I best invest in NFT? No idea, my experience in NFT is insufficient. Possibly you have some tips for us (in the comments below)?
Where best to invest in ETF for 2022
Exchange Traded Funds remain a great investment for beginners. It is not obvious to achieve higher than average returns. Therefore, in many cases, it is better to invest for the average. (Unless one is willing to invest in oneself by gaining necessary knowledge and experience. Investing is fun and educational!). With ETFs, you can get an average return. Or higher, when applying a smart buying strategy.
Well, what is the best way to invest in ETFs?
For 2022, my tip is: start with Value and Dividend ETFs. They currently have a more favorable (average) valuation. This means that the entry point is less risky than, say, a technology ETF.
Where best to invest in Gold and Silver for 2022
Besides stocks, real estate, crypto, NFTs and ETFs, we haven't talked about commodities yet. Most obvious are the precious metals gold and silver. Is this a best investment for 2022 and the long term?
It depends. In general, the average historical return of gold and silver is lower than stocks (of companies) and real estate. However, gold offers a low correlation with equities. This means that the prices move (partly) independently of each other. When shares rise, gold can lag behind (as in 2011 - 2021). Vice versa is also possible. It is for this reason that professional investment funds spread part of the assets in gold. It is a diversification tool for an "all-weather portfolio".
What is the best way to invest in gold and silver?
There are several ways (from lower to higher risk):
- An ETF for the gold price
- Buying physical gold: gold coins or gold bars
- Gold futures
- Gold mining shares
A gold ETF is the most accessible way. With this you invest indirectly in the gold price. The ETF "follows" the gold price. The first and largest ETF is the SPDR Gold Shares (see image). The historical average return is around 6%. For equities, this average is 8 - 10% (S&P 500). However, an average is time-dependent.
Higher returns can be achieved with gold mining shares. In gold, this is the best investment, but also the one with the highest risk. There are relatively large gold mining companies such as Barrick Gold (of which Warren Buffet has shares). However, the highest returns are achieved in the small gold mining companies. This is for advanced investors though. As a beginner, perhaps a junior gold miners ETF is more interesting?
Tip: There is one party I can recommend as the best subscription for researching commodity stocks. Gold, silver, and also copper, natural gas, uranium, et cetera. You can read more about this party in our Capitalist Exploits review.
Where best to invest in oil for 2022
Oil is no longer the black gold. The adage "a good name is better than oil" is now being taken quite literally. Large pension funds are slowly exiting the oil sector. Politicians are fully committed to sustainable energy. And fortunately so: as a long-term investor, we have an impact on the future. What we invest in gets the chance to grow.
Is oil the best investment?
For the long term, no. But for 2022 and the short term, there really does seem to be a great opportunity. After all, oil stocks are valued as if they are facing a quick death (okay, that may be overdramatizing things). In reality, the energy transition needs time. Time that is not there, as the economy wants to run at full speed.
No matter how you slice it, oil is needed for the short term. Perhaps more so than people think. If you do not mind the ethical aspect of this investment, then oil shares could be lucrative.
What is the best place to invest in oil?
Currently, there are a number of interesting companies with favorable stock valuations (not a buy recommendation):
- PetroChina Company (PTR):
- InPlay Oil (IPOOF)
- Royal Dutch Shell (RDSA)
- LUKoil (LKOH)
- Petroleo Brasileiro (PBR)
The above oil stocks have strong scores on both financial valuation (Value) and profitability. There seems to be plenty of room for further price appreciation. Especially if the oil price remains at a high level. Also, these types of companies pay out a relatively high dividend.
As a person, I prefer sustainable investments, such as the best hydrogen ETF. But as an investor, we need to look at facts. And the fact is that oil stocks are probably a (much) better investment than expensive renewable stocks right now. For the long term, clean energy seems to have more chances.
Conclusion on the best investments for 2022
We have not yet addressed the best investment for 2022. After all, that's you. Investing in yourself (relationships, health, knowledge, ...) is the best choice you can make.
When it comes to investing, there are many options. In this article, we talked about the best investments in stocks, real estate funds, crypto currencies, NFT, ETF, and commodity stocks like gold and oil.
What is the best thing to invest in?
It depends on your knowledge and skills. A day trader can get happy with volatile crypto currencies. A long-term investor achieves her success in value stocks. Or maybe you are an expert in macroeconomics and there are opportunities in commodities.
This article contains many concrete tips. The best I can give is: choose long-term investing in value-creating assets about which you have a lot of knowledge (Read: do a lot of research). An asset that creates value will increase in value in the long run. This provides a return.
Don't have this knowledge yet? Then choose lower-risk investments such as ETFs and real estate funds. For many novice (and advanced) investors, this is usually the best investment. After all, those who want to perform above average need to take more risk at the basic level. This risk can be mitigated through knowledge and skill, but not everyone reaches this level.
What is your best investment for 2022? Let me know in the comments below!