It’s been a turbulent few years for markets and economies across the globe, with the impact of Covid-19, the Russian invasion of Ukraine – and in the UK, Brexit – sending stocks and shares prices tumbling, and the ongoing cost of living crisis adding fuel to the fire this year.
Despite some of these things dating back to 2020, they are still causing massive shockwaves both in the UK and elsewhere across the globe, and for investors, it has become increasingly difficult to know how and when to make the best moves. Investments previously considered to have been relatively ‘safe’ are now steeped in uncertainty, and when it comes to cryptocurrencies, which are already known to be volatile assets, price fluctuations have been erratic, to say the very least.
If you’re a first-time investor who is looking to get started on your trading journey, then you might be feeling a little apprehensive given the current climate, but the good news is that armed with the right knowledge and education, it’s still possible to work the markets to your advantage.
One of the most important things to do when starting out is to assess your risk tolerance, as this will vary from trader to trader. When you’re first starting out, it’s wise to keep this relatively conservative whilst you learn the ropes, to avoid making any costly mistakes.
There are clear pros and cons to each of the major types of investment, and they all depend on what you want to get from them and how much time you’re going to be able to spend on trading. Here, we take a look at some of the most popular options to help you decide which one is right for you.
Do you want stability?
You’ll probably already know that it’s best not to put all of your eggs in one basket when it comes to investments, and this is particularly true at the beginning of your journey. Diversification will help to provide a sense of stability and balance, so that if one of your trades should go awry then you still have other assets to fall back on. It’s always good to have an investment that will generally continue to appreciate in value at a steady pace, so be sure to choose some traditionally ‘safer’ options, like gold or property, alongside more volatile ones like crypto.
Historically, a lot of people have invested in property when they wanted something that they could rely on. There will always be demand for it, property, and generally speaking, it will appreciate in value over time provided it is well cared for and maintained.
In 2023, the property market has seen some dramatic fluctuations, first with a period of massive inflation, before prices tumbled again amidst the ongoing UK cost of living crisis.
With this in mind, it’s fair to say that predictability doesn’t really factor into property investment anymore – but whilst the markets may be turbulent at present, the general trend over time tends to be upwards. So, provided you’re happy to play the long game, investing now, while prices are at the lowest they have been in some while, could turn out to be a very wise move later on.
Gold is another asset that is typically associated with reliability – something that has always been one of its biggest and most convincing selling points. Although its value may fluctuate just like that of other assets, it has historically stabilised over and over again because it’s a tangible asset that offers great liquidity and ultimately, is finite. But gold also increases in value during periods of social and political turbulence, and that certainly applies to the present time when choosing between gold or Bitcoin, for example.
Cryptocurrency, on the other hand, is invariably prone to large fluctuations, and it has become almost impossible to predict how market prices will move from one day to the next. The eagle-eyed investor may well be able to take a gamble that pays off handsomely when it comes to crypto – but when it comes to risks, digital currencies like Bitcoin and smaller alt-coins are some of the biggest out there.
Do you want security?
Stability and security are very similar factors, but with some investments, it’s worth discussing the physical security with which they are associated, and not just fluctuations in value. For example, it’s not enough to simply buy a house and assume that it’s going to increase in price over time – and in order to ensure it happens, you’ll need to do a lot of work to ensure it either becomes, or remains, an enticing proposition for future potential buyers – which of course, can require a significant level of investment in itself.
Remember that with more extreme weather events in the UK – which are becoming increasingly common thanks to climate change – every home will need to withstand greater fluctuations in temperature and adverse conditions such as heavy rainstorms and wind. That means that any property that you buy will need to be weatherproofed, not just for the kind of conditions that we’re facing right now, but for even more dramatic weather patterns that might occur in years to come.
The security of cryptocurrency security is something that you’ll need to take very seriously if you’re considering investing in digital assets like Bitcoin and Ethereum.
Whilst there’s no denying that these assets are best suited to traders with greater risk tolerance, there are plenty of steps that you can take to protect your crypto if you do decide to take the plunge. It’s not inherently unsafe, but the fact is that it is very desirable to cyber criminals, so, make sure to invest in a hot and cold wallet. A hot wallet is a simple piece of software that gives you more security while you’re trading online, while a cold wallet is the next step; a USB device that you can download your coins onto and take them offline.
Still considering gold as an alternative? One of the best reasons to invest in gold is its ability to retain its value, provided you take care of it properly. It’s often possible to pay the broker from whom you purchase it to place it in their vault, which should come with top-of-the-line security and provide the best conditions possible regarding temperature and humidity.
You may also choose to keep your gold in a safe at home, but this raises the security concern considerably. Remember that it’s difficult to store a large amount of gold, and the insurance premiums will be significant. You should also try to avoid handling your gold as much as possible to avoid damaging it, never clean it with chemicals, avoid using plastic or leather gloves to touch it, and just try to leave it alone in general.
Do you want a collector’s item?
This one is more specific to gold and cryptocurrency, but it’s worth considering. A lot of people make investments because they are simply looking at the financial side of things, and whilst there’s nothing wrong with that, this is often related to a more short-term way of thinking.
One of the reasons why gold is so attractive to a lot of investors is that it’s possible to buy collector’s items in gold coins. There are special edition coins made to commemorate certain events, such as the coronation of King Charles, for example, while others are created with a special design that, once printed, may never be repeated, and in this case, you will know that you have something in your possession that is truly rare.
Cryptocurrency also offers this to a certain extent with NFTs. The pros and cons of investing in NFTs have been widely debated over the last couple of years, and there have been numerous stories of thefts and crashes in value. However, there is the opportunity to buy something that is one of a kind, and for this reason, they have become one of the fastest growing assets in terms of popularity and demand over the past few years.
There is also a scarcity to be considered when it comes to Bitcoin, the most popular and widely known form of cryptocurrency, as there will only ever be a maximum of 21 million Bitcoins. This does mean that Bitcoin will likely always be in high demand, and over time, can command some excellent resale prices – but do bear in mind that you’ll likely need to ride out some market turbulence along the way.
The bottom line
There are many investment opportunities to choose from in 2023, but which is right for you will come down to a number of different factors. While cryptocurrency is notoriously volatile, it can offer investors some impressive returns for those prepared to play the long game, and the collector’s item element to NFTs makes them particularly highly sought-after.
Property can still be a good long-term investment, provided that you do your research and are ready to put in the work to maintain and increase value, while gold has proven to be a resilient figure in the market as it has a steady value and excellent liquidity (and certain types of gold are also exempt from Capital Gains Tax).
These certainly aren’t the only assets to choose from, but they are a good place when starting out. And, provided you’re willing to spend some time learning the markets and the art of trading, 2023 is as good a year to start building your portfolio as any.
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.
