What are good investments now? Guide for eternity

“What should I invest in? Which stocks should I buy now? What is a good idea to invest in now to get the best possible return?” 

These are questions many people ask themselves when times are tougher, and I have to admit that this is an article I was unsure if I should write at all.

Because I'm not really a fan of a reactionary thought pattern - at least in an investment context. Trying to adjust one's portfolio according to everything that happens in the world is an exercise that for most have ended up losing more than they have gained.

And that is precisely why I have called this article "Guide for eternity". I mean that what you read here will be applicable whether we are talking 2024 or 2153.

Doing it the simple way is often the best way, and I'm going to use the article to promote that you don't overcomplicate things.

As the legendary investor Peter Lynch once said almost 40 years ago:

If you spend 13 minutes per year on economics, you have wasted 10 minutes.

Lynch managed an annual return of around 29 percent in his 13 years as manger for the Fidelity Fund - and it wasn't by timing the market or predicting the future by looking at macroeconomics, as many of his competitors did.

Just look at how many actively managed funds that have lost against index funds over the years. The reason is always the same: frequent changes in the portfolios, based on assumptions and guesswork in the market.

So how do I structure this article, you might ask?

Well, read on and see for yourself.

Which stocks should I buy now?

Stocks and mutual funds are always good investment options, if you ask me. As long as you have a long time horizon and don't need your money immediately.

And not least – as long as you know what you own.

Individual stocks

There are a bunch of different companies on the stock exchange, and my best tip is to find companies with a solid balance sheet, a lot of cash on the books and little debt.

If you do this, combined with stable income growth and nice dividends, you will probably do well over time.

Funds

If you are going to invest in funds, you should know the differences between index funds and actively managed funds . The simple is often the best, and an index fund gives you good opportunities for a good return.

Index funds are a good option for the vast majority of people - regardless of market conditions. Index funds follow a specific stock index and give you exposure to a wide range of companies. This can be a good way of spreading the risk, and over time has proven to be an excellent investment for building wealth.

Individual shares require more time and analysis from you than, for example, an index fund, where you can be more of a passive investor than an active one. Read more about what you should invest in from funds and shares here.

Is it a good idea to invest in funds now?

Yes, it pays to save in funds - but the same applies here: As long as you do it with money you can afford to lose and gives the investment time to give a good return.

The stock market fluctuates frequently up and down in the short term, but has produced a strong rise in the long term. If you have money at your disposal that you don't intend to use for minimum 5 years, I would invest.

Index funds have been shown to give a return of almost 9 percent annually - which means that a one-off investment of $100,000 in 2007 would have a value of close to $400,000 in 2022. That's a pretty good return, which would have been even better if you had topped up with fixed savings along the way! (source: Officialdata .org)

If you had jumped in and out of the market in the same period, trying to time it, you could risk missing the best trading days of the period.

Just look:

• If you missed the top 10 days during that period, you would have ended up with an average return of 3.29 percent annually instead.
• On the other hand, if you missed the 20 best days, you would have had a -0.17 percent return. A lot of work for nothing, in other words.
• But it gets worse: If you missed the best 40 days, you would have had a negative return of -5.32 percent!

Source: Putnam Investments

It would therefore have been much more profitable to put your money in the market and sit resolutely on your hands afterwards.

And an investor who is known to sit on his hands, and to execute very few trades (if any) in a year, is Charlie Munger, who has his billion-dollar fortune spread over just a few companies:

«We recognized early on that very smart people do very dumb things, and we wanted to know why and who, so we could avoid them.»

Charlie Munger

And I myself would like to emphasize that trying to time the market and adjust my portfolio accordingly is not part of my own investment philosophy.

I know I am not capable of understanding all the mechanisms of the economy. I can't predict or control what happens either, so I rather choose to focus on what I do best - analyze companies.

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How to invest in funds

There are many funds to choose from, and which investment strategy you have affects what is relevant for you.

Different fund types:

• DNB Global Indeks A – fast, enkel sparing for den passive investor, med lave gebyrer
• JEPI – index-following ETF for those who want to build monthly passive income
• First Veritas - for those who want to try to beat the index with quality companies

You can read this article about which funds you should choose, if you want to learn more about these.

Should I invest in real etate?

A house is often the largest investment most people make in their lifetime. But is it still a good idea to invest in real estate now? 

Well that depends on when you actually read this article. As I said, I cannot predict the future, and I do not give investment advice either.

But whatever the market conditions, there are some things you should consider:

1. What is the intention of the purchase? My girlfriend and I are looking for a place now. I understand why many believe that having a roof over your head and your own home can be defended as an investment, and I myself am willing to invest a proportion of my wealth in housing, even though I believe I can achieve greater financial gain in the stock market .
2. Housing market in general: Housing prices in Norway have risen sharply in recent years, especially in the largest cities. This has led to many wondering whether we are in a housing bubble. Brokers and experts disagree, and it is not unusual to see two news stories on the same day, side by side, with two completely different forecasts about which way the housing market will go. If you think house prices will continue to rise, you may want to invest in real estate. But be aware that prices may also fall.
3. Location: Location is a critical factor in real estate investing whether you are buying in good times or bad. To find the best investment opportunities, you should check out which areas have high demand, good transport links and proximity to workplaces, schools and so on.
4. Flip or rent out: Buying an additional rental property can be a good investment, if you find the right property in the right location. Remember that it is important to find a stable tenant and to set a realistic rental price. It could also be an idea to buy a home that needs some new love, which you can resell after refurbishing it.
5. Type of Property: Consider the type of property that best suits your investment goals. Residential properties can provide rental income and potential value increase, while commercial properties can offer higher rental income and longer leases.

You can also check out crowdlending and REITs for other ways to invest in real estate.

Invest in crypto currency?

If you had invested in Bitcoin just a few years back, you would have had a high return investment today. An insanely high return, to be more precise.

If you had invested $1,000 in Bitcoin in 2015, in 2022 you would have had close to $30,000 on the investment (source: Motley Fool).

But is it too late to enjoy the same boom Bitcoin, Ethereum and other cryptocurrencies have enjoyed? Is it a good idea to invest in cryptocurrency now? Well, before you even invest in cryptocurrency, you should think about how much risk you can tolerate.

Here are some things to consider:

1. Volatility: Cryptocurrency is known to be highly volatile. This means that the value can fluctuate greatly in a short time. If you can tolerate such fluctuations and believe in the future of cryptocurrency, it can be an exciting investment. But be prepared that the value can also drop sharply.
2. Regulations: Cryptocurrency is still a relatively new phenomenon and it is uncertain how the authorities will regulate this market in the future. Any regulations may affect the value of the cryptocurrencies.
3. Use cases: Cryptocurrency has several use cases, such as means of payment, digital gold and smart contracts. If you believe that cryptocurrency will play an increasingly important role in society, it may be worth investing in it.

Again, if you have money you can afford to lose, you may want to have a small exposure to cryptocurrency. I myself have set aside a small amount in Bitcoin which I see as a kind of "bonus retirement savings".

If things go well, and Bitcoin continues its huge rise, retirement could be really nice. If it goes straight west, the invested funds are not large enough to have any major negative impact on my future plans.

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Investing in gold and other commodities

Gold and other commodities, such as silver, oil and metals, have traditionally been popular investments. Many people love gold, because gold does not rust and it is a limited component of it, unlike paper money.

But is it a good idea to invest in commodities now? Here are some thoughts:

1. Inflation: Gold has often been seen as a safe haven in uncertain times and a hedge against inflation. If you believe that inflation will increase in the future, you may want to invest in gold.
2. Commodity Prices: The prices of commodities can fluctuate greatly, depending on supply and demand.

You can read more about how to invest in gold in this article.

So, what is a good idea to invest in now?

I believe that investing is generally the best way to save. You have the opportunity to turn a little money into potentially a lot of money - provided you take your time and don't do more than you have to!

We don't know much about where either the housing market, the stock market, the commodity market or the crypto market is going. Sometimes the market is expensive. Other times it's outrageously cheap. Over time, the markets have been shown to move upwards.

But whether you choose stocks, mutual funds, real estate, cryptocurrency or commodities, it's important that you only invest with money you can actually afford to lose.

When to invest in the various assets is a question that is difficult to give concrete answers to. No one - not analysts, economists, investors or professors, can give you a 100% answer to what the future will look like.

I myself am a big fan of the investors Howard Marks , Joel Greenblatt and mentioned Peter Lynch, who all agree that macroeconomics is a factor that overcomplicates more than it helps us when we have to make investment decisions.

In this article you have seen both quotes and a video by Peter Lynch who talks about just how difficult it is to use macroeconomics in investments. I recommend you check out several interviews done with all the mentioned investors on Youtube.

Good luck with your investments!

Disclaimer

The content of this article is NOT intended to be taken as investment advice or recommendations, but only to provide information about various types of investments. Always do your own research before investing your own money.