Euronews Business spoke to a number of financial and investment experts to find out what assets to invest in, how to invest in them and what the outlook may be.
With the cost of living still posing a threat across many European countries, as well as rising geopolitical instability, investing seems to be becoming something of a minefield. Even so, investing is necessary because it allows people to prepare for their future and increases financial security in later years.
Knowing what to invest in and how to go about it can still be a daunting task, especially with the number of investments available in the market at the moment. We take a moment to look at the options.
Which assets should people invest in at the moment?
Assets such as stocks, real estate and gold have been some of the most popular investment choices over the years. However, alternative assets such as cryptocurrency, as well as even more niche ones, such as art and wine have also seen a rise in interest over the past few years.
David Materazzi, the chief executive officer (CEO) of Galileo FX, advised in a note: “Right now, invest in stocks, bonds, real estate, gold or alternative assets, but keep it simple. Stocks from strong, understandable businesses are solid because they compound returns.
Although bonds are also safe, they are likely to preserve wealth, instead of actively growing it, he explained.
Materazzi went on: “Real estate can work, but only in high-demand areas. Gold is insurance against inflation, not an investment that builds wealth. Alternative assets like private equity lock up money and aren’t worth the risk unless you truly know the game. Stick with what produces returns. Avoid chasing speculative trends.”
Adam Ferrari, the CEO of Phoenix Capital Group, gave his views: “When you’re looking at today’s investment landscape, it’s clear that federal budget deficits and inflationary pressures are driving a lot of uncertainty.
“Deficit spending isn’t slowing down, so we’ve got a bias toward hard assets that can’t be easily manipulated. Personally, I think the stock market feels overvalued, but that’s likely a byproduct of inflation.
According to Ferrari, alternative investments such as energy companies and oil, could provide a better risk-adjusted return, along with gold.
He continued: “Gold is already near record highs, and I’d bet it stays strong. Copper’s also got momentum, and real estate is another solid option. Prices have surged over the last couple of years, and I don’t see that trend reversing anytime soon.”
Adrian Fernandez-Perez, assistant professor in finance at UCD Michael Smurfit Graduate Business School, said: “With central banks lowering interest rates, investors should seize the opportunity to shift towards riskier assets like stocks, rather than sticking with safer options such as fixed income securities like treasuries or bonds.
“Commodities markets could also be considered. However, due to the significant influence of geopolitical factors on these assets, and how turbulent the waters have been lately, I would recommend this route only for those with a strong risk tolerance.”
Grzegorz Drozdz, market analyst at Invest.Conotoxia.com, said: “To better determine which assets are currently worth investing in, it is essential to understand where we stand in terms of the economic period, macroeconomic situation, and geopolitical context.
He pointed out that access to credit has become easier in recent months as most large central banks have already started cutting interest rates.
Drozdz continued: “Interest rate cuts impact the valuation of both stocks and, particularly, bonds. Therefore, in the case of further interest rate cuts, we can expect an increase in the prices of fixed-coupon bonds. For investors who prioritize the safety of their funds, it is recommended to favour government bonds over corporate bonds.
How should they invest in these assets?
There can be several investment strategies, which takes into account a person’s capital pool, risk tolerance, age, investment experience and desired outcome. An investment strategy and portfolio is created based on these factors.
Materazzi said: “To invest in stocks, focus on companies with solid earnings and add to your position regularly. With bonds, seek quality and don’t expect growth. Buy real estate only in booming markets where supply lags demand. Gold is straightforward, just don’t expect it to grow.
“Only touch alternative assets if you understand the space, because they’re illiquid and tricky. Consistency wins. Jumping into too many markets dilutes focus and returns. Keep it tight. You don’t need to dabble in everything.”
Ferrari said: “The best strategy is to avoid middlemen when possible, but most people don’t have the ability to buy things like oil fields outright. In real estate, you could go the direct route, maybe invest in a rental property, or partner up.
“You could look for funds with low fees and a solid track record. With gold, exchange traded funds (ETFs) are a cost-efficient way to get exposure. I always recommend minimizing fees and focusing on direct access to the asset you’re after.”
Fernandez-Perez pointed out: “Investing in well-diversified products like exchange-traded funds (ETFs) is a smart move, as they offer access to a broad portfolio of individual stocks at a lower cost.
“For example, equity market ETFs can provide significant exposure to the stock market and are as straightforward and cost-effective to trade as individual stocks. I recommend discussing these options with your financial advisor to ensure they align with your investment strategy.”
Drawbacks of investing
Although investing can significantly increase your capital and enhance your financial security, there are still some drawbacks to be kept in mind before taking the plunge.
Ferrari said: “Liquidity is the big one. If you’re tied up in something like real estate or a commodity directly, you might not be able to cash out quickly when you need to. If you think you’ll need access to your money in the short term, owning assets directly isn’t the way to go.
“However, if liquidity isn’t a concern, direct ownership can be a smart play. Just keep in mind, if you’re holding physical assets like a house it’s not like you can sell it tomorrow. Timing can matter a lot, and if you’re forced to sell at the wrong time, you could take a hit.”
Materazzi highlighted: “The danger with stocks is overpaying. Bonds lose value to inflation over time, so they are safe but not wealth-building. Real estate isn’t liquid and hidden costs pile up. Gold sits there – it doesn’t work for you.
“With alternative assets, your money’s locked away and you’re stuck with whatever happens in the market. Don’t ignore these risks. They’re real and they’ll bite you if you overlook them. Each investment has drawbacks. Be aware and stick to what compounds over time.”
Fernando-Perez said: “It’s crucial to have a thorough understanding of how ETFs operate, especially regarding their fee structures. High fees can significantly diminish your overall returns, so being aware of these costs is essential for maximizing your investment.
“Additionally, it’s important to know where the ETF invests your money; for instance, it may target companies or industries that don’t align with your values or ideals.”
What is the outlook for these assets?
Geopolitical factors such as the ongoing Middle East tensions, high inflation and the recently concluded US elections have caused considerable worry to investors, leading them to wonder about how their chosen assets and investments could perform in the near future.
Materazzi said: “The outlook for stocks remains strong, especially if you focus on quality companies. Bonds offer little growth and depend entirely on interest rates. Real estate will depend on supply and rates: some areas will shine and others will sink.
“Gold stays tied to inflation and fear, nothing else. Alternative assets will remain risky and long-term. You can’t predict short-term swings but you know one thing: businesses with solid earnings always win in the long run.”
Ferrari highlighted: “Over the long haul (5-10 years) I’m still bullish on hard assets like oil, real estate, and gold. Over time, these tend to work out, but if you’re betting on what’s going to happen in the next few months, that’s more like flipping a coin.”
Fernando-Perez explained: “While I can’t predict the future, if central banks continue to lower interest rates and inflation keeps declining, equities are likely to perform well, potentially outpacing fixed income securities like treasuries and bonds.”
Remember: This information does not constitute financial advice. Always do your own research on top to ensure it’s right for your specific circumstances. We are a journalistic website and we aim to provide the best guides, tips and advice from experts. However, If you decide to rely on the information on this page, you do so at your own risk.
