Bored at home over the last 18 months, many people have turned to the markets and dabbled in day trading for entertainment and the hope of profits.
Market activity increased dramatically in 2020 compared to the year before, according to date by Cerulli Associates, and stock trading and cryptocurrency tips websites all saw significant gains in traffic. Meanwhile trading apps like Robinhood, Freetrade, and Tickmill have seen a surge in business.
Long-term investment is encouraged by financial advisors as a way for individuals to build wealth with compound growth, but for new investors building and growing an investment portfolio can be daunting. It can be difficult to decide where to start and with so much market uncertainty at the moment, few can options offer any certainty of growth. However, if you are looking to start investing and have the capital available to risk, here are some of today’s popular investment options.
Stocks & shares
Most people will already be investing in the stock market via a pension or stocks and shares ISA, but many people also invest in the stock market directly, choosing to buy shares in companies they think will succeed. Commission-free investment apps have made buying and selling shares easier than ever in recent years, and millions of people enjoy the idea of owning a little slice of companies like Apple, Google, and Amazon.
Indexes group together stocks into a few different companies rather than just one as with typical shares. This makes them less volatile and a popular starting point for new investors. Investing in indexes will spread the risk, but they vary wildly in focus and many people might find it useful to discuss their priorities in terms of growth opportunities, risk, and moral compass where they might invest their funds.
Gold is one of the oldest and generally considered one of the least volatile investment options in the long term. When stock markets crash, gold is traditionally viewed as a “safe haven” form the uncertainty of the markets by investors, and after an uncertain June, gold has already been bouncing back in July this year.
Tickmill Market Analyst, James Harte said on July 5th, “Gold prices have started the week on a firmer footing with the safe haven asset finding a bid over the European morning on Monday”
Trading currency pairs, commonly known as forex trading, has become increasingly popular over the last few years despite its complexity. Trading apps have made forex trading simple and easier to understand in recent years and large currencies such as the US dollar (USD) and Euro (EUR) are generally subject to fewer fluctuations than smaller currencies that are less widely traded, and so are popular with some traders
Cryptocurrencies like Bitcoin and Ethereum have made some individuals very wealthy in recent years, with the digital currencies seeing growth over 1000%. However, as no cryptocurrency is backed by the stability of a nation state or a physical asset like gold, the prices vary wildly throughout the day, with some days seeing variations of up to 20 per cent.
MoneySavingExpert founder Martin Lewis recently discussed the risks and rewards of investing in Bitcoin, saying:
“If you can’t afford to lose the money that you put in, then do not invest in it. It’s a gamble, like all forms of stocks and shares, and all forms of investment and putting money in gold. That’s your choice, but if you do it the right way the investment should work for you, but it doesn’t mean you won’t lose money though.”