The investment world is changing rapidly, and savvy investors should be aware of what’s on the horizon. From alternative energy and decarbonization to legal finance, robo-advisors and social impact investing, new opportunities are on the rise.
Gen Z is leading the way with their interest in crypto and fractional shares. Find out how to market to this new investor cohort.
Technology
Technology is a key driver of many emerging investment trends, and finance professionals should keep a close eye on the industry to see where there might be new opportunities. Specifically, investors should be looking for biopharmaceutical companies with robust pipelines, as well as clean energy investments. The latter trend will continue to grow in 2023 as governments worldwide ramp up efforts to combat climate change. In addition, technology that improves interoperability across platforms is also a growing area for investment.
Alternative investing is a growing trend among younger Americans. Almost 30% of Gen Zers and 26% of millennials are familiar with or participating in alternative investments. These investments are a great way to diversify your portfolio, and they provide passive income and protection against market volatility.
Another investment trend that is becoming increasingly popular is socially conscious investing. Sometimes referred to as “green investing,” “ethical investing,” or “sustainability investing,” this type of investing allows you to invest in companies whose values align with your own. This is an excellent way to support the future of our planet and society while achieving your financial goals.
As the stock market continues to fluctuate, it is important to diversify your portfolio. One popular option is to invest in international stocks. Unlike domestic stocks, foreign stocks can offer higher returns because of differences in economic growth and currency valuations. In addition, international investments can help to offset political risk in a country, which is an important consideration for many investors.
Besides stocks, another option is to invest in fixed income. With interest rates so low, some traditional investments are offering high yields, including mutual funds and high-yield savings accounts (HYSAs). HYSAs can offer up to 5% in annual returns, which is more than the national average for a savings account.
For those who want to diversify their investment portfolio even further, consider real estate and debt instruments. Both of these types of investments can offer attractive returns in the long term, and they can be a good hedge against market volatility. However, it is important to research each investment carefully before making a decision.
Crowdfunding
Cryptocurrency, ESG investing, do-it-yourself accounts — there are many emerging areas and trends in the world of investing. These trends have garnered media attention and social-media buzz. But while it can be exciting to embrace the latest and greatest, it’s important for investors to take time to fully understand what they’re getting into.
For example, crowdfunding has emerged as a new way for investors to support start-ups and early-stage private companies. This type of investing can help entrepreneurs secure funds from a large number of individuals who will invest in exchange for equity or debt stakes in the company. This is different from traditional stock offerings, which typically only involve accredited investors.
Investors should be aware that equity-based crowdfunding investments are not protected by the same rules and regulations as publicly traded securities. This means that shares obtained through this method of investment may not be easily resold or liquidated, and investors should always research any company they plan to back with their funds.
With Gen Z entering the workforce and older generations retiring at record rates, it’s crucial for financial institutions to stay up-to-date on new investment tools and practices to serve this growing demographic. The future of investing will likely be marked by increased demand for alternative investments, which tend to be insulated against market volatility. You can use this article on Cayman Financial Review to learn more about financial advice and reviews that might help you.
One popular alternative asset is real estate, which can yield solid returns in most markets. Another is renewable energy, which could power 90% of the world’s electricity by 2050 — a goal that will require substantial capital investment in addition to technological advances to ensure sustainable production.
Lastly, cryptocurrencies continue to garner attention, despite their volatile price swings in 2021. Despite the froth, some investors believe that the underlying blockchain technology behind crypto assets has significant long-term value.
Ultimately, it’s crucial that advisors bring these emerging trends to the attention of their clients. Generation Z is more prone to listening to “Finfluencers” online than previous generations, so it’s vital to make sure that any investments they recommend are vetted carefully. Also, they must be made aware of the risks involved with alternative investments, especially those involving cryptos.
Sustainable Investing
Sustainable investing, also known as socially responsible investment (SRI) or impact investing, is an emerging trend that is changing how businesses and investors think about their investments. It combines traditional investment strategies with environmental, social, and governance (ESG) insights to help investors create long-term value while making positive social change.
Sustainable investments can take many forms. They can include public equities that focus on ESG performance and sustainability metrics, ETFs and mutual funds that invest in companies with good ESG ratings, or direct investments in renewable energy projects or community development initiatives. They can also involve leveraging shareholder activism to push companies for greater ESG disclosures and alignment with corporate values.
As the demand for responsible investing options grows, so too does the investment industry’s understanding of how to best assess and incorporate sustainable principles into the investment process. This is particularly true in the face of increasing global regulation that will have a significant impact on company playbooks, transparency, and disclosures.
ESG investing centers on a stakeholder-centric approach to business, with companies establishing ethical and eco-conscious policies that provide transparency for all stakeholders. These policies cover a range of topics, from carbon emissions and water usage to employee diversity and supplier oversight. Investors can then use this information to identify and assess potential risks and growth opportunities. Rating agencies, disclosure and reporting standards, and third-party verification can all contribute to the ESG assessment and evaluation process.
In 2023, we expect to see the emergence of new investment themes and asset classes that align with ESG principles. This expansion will likely be driven by both the demands of millennial investors, who are expected to account for 99% of all US investors by 2020, as well as increasing government incentives and regulations that will affect corporate ESG practices.
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Self-Ruled Investors
A new breed of do-it-yourself investors are using specialized digital investing platforms to pursue investments they’d normally seek out through traditional channels. These investments often include crypto assets, but they also encompass everything from crowdfunding to socially conscious venture capital investments to real estate investment trusts. These investments often require a significant amount of due diligence, so it’s important for investors to do their research and ensure they’re investing in the right way for their specific objectives.
The internet has given rise to a class of stock-picking “moonshot” traders who are seeking to beat the market by making a series of smart investments at just the right moment. These investors are largely made up of Gen Z and millennials who are bringing with them an appetite for alternative investing. While these trends may be a bit volatile, they have the potential to revolutionize the investing landscape.
Investing in unstoppable trends can be a powerful strategy for building long-term wealth. For example, many experts predict accelerated growth in renewable energy companies. “Investors can benefit from positioning their portfolios to capitalize on a clean energy transition that includes everything from carbon capture and electric vehicles, to solar and wind,” says Penta. One of the most exciting new opportunities is a growth sector called heat pumps, which offer a more energy-efficient alternative to furnaces and air conditioners.
Other promising new investments are those that support global climate change goals. Investors can invest in solar and wind technology as well as water resource management. “These technologies and practices are projected to be the largest drivers of sustainable investments in the future,” says Bailin. “The climate-change challenge will be a game-changing opportunity, and I expect the majority of investors to align their investments with this trend,” he adds.
In addition, the COVID-19 crisis has highlighted the importance of resilience over efficiency. As trade patterns shift, this will favor global champions that can adapt to changing economic conditions and market conditions.
A new investment trend is emerging whereby customers are choosing to invest in their own retirement accounts. The idea is to allow individuals to choose their own investment managers, and to take a more hands-on approach to managing their own money. This is a response to the growing concern over rising costs and fee structures, as well as concerns about the effect that fees have on long-term returns.
