Investments of 2010

Best  and Worst  Investments of 2010

When it comes to financial success the adage “show me your company and I shall tell you who are,” could be modified to “show me your investments and I shall tell you how successful you are.” The essence of financial success boils down to smart investments. The investment market is very volatile, though, and many of us are unable to keep up with ever-changing investment trends and market movements.

This is where comes into play. Our experts are constantly on the lookout for absolutely the best — and worst — investment strategies. For 2010, the following are the best investment picks and worst investment picks:

Best of 2010

We live in very uncertain times and investment strategies that worked so well in the past may not be so viable after all. Many analysts predict that we are in a recovery phase, while others maintain that the effects of the recession still linger and there may be yet another downturn depending on how the world markets fluctuate.

We adjust our best investments of 2010 strategy accordingly. One thing for certain is that the best investments of 2010 are not going to follow prior trends. While in the past, many individuals optimized a mix of stocks and bonds, primarily because they wanted to balance risk versus returns. Bonds being safer investment vehicles offset the otherwise volatile risks associated with stock and stock fund portfolios.

During the course of this year, we have seen a variety of strategies. Some investors continue opting for stocks, while others prefer gold, and still others are investing in emerging economies, such as India and China. Those betting on stocks as a hot investment vehicle support their strategy based on the 60+% growth in this class of investments, but what they miss is that stock prices were at a historical low over the past few years and the growth may essentially be a recovery (and not growth) indicator. Nonetheless, stocks do remain a viable investment strategy in 2010, but to a comparatively lesser proportion of the investment portfolio.

With bonds, shortening maturity and cutting risk exposure may be a good strategy, especially if interest rates continue to rise.

Despite the higher gains associated with both stocks and bonds, there remains an element of risk. In such an instance, liquid investment vehicles, such as money market accounts, CDs, savings accounts, and other liquid or near-liquid investments would be best investments in 2010. The interest income generated from these investments may be lower but your principal would be relatively safe, especially if your bank is FDIC insured.

Given the volatility in market conditions diversification amongst the various asset classes is the key to making best investments in 2010.

Worst of 2010

Thus far, we have discussed the best investments of 2010. We now focus on the worst investments of 2010. Well, if you are looking for near time gains real estate may probably be a bad investment but depending on where you purchase the property and its ability to appreciate, real estate may be a viable investment vehicle in the long run.

Basically, any risk-prone investment vehicle may not be a good pick for 2010, at least not until the volatility in the markets has stabilized and realized some sense of normalcy. Take the example of the highly leveraged exchange-traded funds (carrying at least 100% leverage). Unfortunately, market fluctuations would make one to loose money in this investment vehicle.

Given the uncertainty of emerging market stocks, these may be a worst investment (2010) for some investors.

In case you thought buying gold was a good idea, a caveat: the purchase of gold is one investment that is best left to experts, primarily because it takes a really discerning eye to weed out poor quality gold from the genuine “yellow currency.” Of course, purchases made as a personal preference do not fall under the investment category.

We hope you enjoyed our article “Investments of 2010 — best investments of 2010 and worst investments of 2010”. The financial markets, as we know, are very volatile and conditions could change without notice. It is always a good idea to check with a qualified investment professional before making any investment decision.

Disclaimer: This article is not intended as investment advice. You must check with a qualified professional before making any investment decision.