With the new year upon us, many investors have questions about their investment portfolios in 2022. And some of the biggest names in the industry have made some educated guesses about what you can expect. While there are certainly no guarantees, this guidance could give you an idea of what you can do to maximize your investment returns in the coming year.
A financial advisor can help you create an investment plan for your 2022 goals and needs.
5 Global Risks in 2022
It’s important to remember that no matter what your investment portfolio looks like, it could be impacted by forces from all over the world. With that in mind, financial services company Charles Schwab has broken down five big global risks in the year ahead:
1. Shortages will turn into gluts
If you’ve paid attention to the news at all this year, you know there have been shortages of many goods. In 2022, it’s possible that the supply chain issues will end and some of these industries will end up with excess stock instead. This could lead to price drops, which could actually end up hurting some of the industries — like exercise equipment — that have benefited from shortage pricing.
2. Rate hikes will be slower than expected
It’s expected that there will be hikes to interest rates from a number of central banks in 2022, including Bank of England, Bank of Canada, Reserve Bank of Australia, and the U.S. Federal Reserve. If inflation slows the way some think it will, though, the rate hikes may be slower than expected.
3. China will go from cracking down to propping up
As the rest of the world is tightening, China’s monetary policy is going into easing mode. This could have global impacts.
4. COVID waves may look different
The pandemic is not over yet, and it will have an impact on investors again in 2022. Schwab warns that waves of COVID in 2022 may look different, though, and stocks that soared during previous COVID spikes like tech companies won’t necessarily soar again.
5. Geopolitical surprises
As always, global political events could impact your portfolio. New political leaders, potential wars and other major events could end up reverberating onto your bottom line.
3 Assets to Consider Trimming in 2022
While you can’t predict exactly how global events will impact your portfolio, another major financial services company, JPMorgan, has some ideas of assets investors should consider pulling back from in the coming year:
1. Unprofitable equities
A lot of huge companies actually struggle to turn a profit — examples include Facebook, Tesla and Salesforce. JPMorgan notes, though, that the time for investing in these companies may have passed. They are 40% below their highs even as the broader stock market soars.
2. Investment grade and upper-tier high yield bonds
JPMorgan notes that these bonds are a good investment when their is a broad difference between their yield and the yield of Treasury bonds, which are theoretically risk free. That is currently not the case, so they aren’t likely a good investment in 2022.
Gold is often used as a hedge against inflation, but in recent years it has not been an effective one. Furthermore, inflation is expected to slow in 2022, so gold won’t have as much utility anyway.
The page of the calendar is about to turnover, and you’re likely making plans for the year, including how you are going to invest. There are a few potential global issues that will impact your portfolio, and a few assets you should consider trimming in the coming year — including unprofitable equities and gold.
Financial Planning Tips
- If you want to get the new year off on a good fit investing-wise, consider finding a financial advisor to work with. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- SmartAsset’s investing calculator can give you a sense of what your investments will look like down the road, and can help you with long-term planning.
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