Five popular investments in 2023: analysis and key parameters

Forex

Forex trading involves buying and selling currencies in the foreign exchange market. However, some brokers also offer CFD trading assets, including commodities, indices, stocks, and cryptocurrencies. Although Forex trading requires knowledge of the markets and trading strategies, it is much easier to enter for an investor with a small to medium budget. Moreover, this investment option allows you to limit your risk exposure in a variety of ways (including Stop Loss and Take Profit orders), helping to survive unquiet times in the markets.

Since it's much easier to open sell trades in Forex than in regular stock trading, you can make profits even when whole markets are falling. This makes Forex so attractive for investors who want to have full control over their assets at all times. The fast-paced nature of the market and the use of leverage allow amplifying the returns and accelerating return on investment.

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Complexity: ⚫⚫⚫⚪⚪

Speed for investment to pay off: fast

Control over investment: high

Budget: $

Savings account

A savings account is a type of bank account that allows individuals to deposit money at a bank and earn guaranteed interest. Although the interest rate is low, it is considered safe and reliable. Investors often use savings accounts for creating an emergency fund, saving for specific goals, and storing money for future expenses. Savings accounts will not generate any tangible profits unless you invest considerable funds in them, but will help you to protect your money from inflation, at least partially. Investors generally do not have much control over their savings accounts.

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Complexity: ⚫⚪⚪⚪⚪

Speed for investment to pay off: slow

Control over investment: low

Budget: $$$$

Stocks

Investing in stocks involves buying shares of promising companies and holding them to profit from an increase in value over a certain time period. Stock prices can fluctuate greatly based on market conditions and the performance of the company. It is a highly complex investment option, requiring you to research individual companies and evaluate their financial performance. In 2022, the S&P 500 index, which is made up of the prices of 500 U.S. listed stocks, generated a negative return of 19.44%. This highlights the dangers of investing in a bear market. Investing in stocks requires a relatively high budget, starting from thousands of dollars.

The speed for stock investments to pay off can vary significantly based on the companies' performance and market conditions. In some cases, investors can realise significant gains in a short period, while in other cases, it may take several years to accomplish. Investors have considerable control over their stock investments, as they decide which companies to invest in themselves. However, it is harder to enter sell trades with stocks than with CFD assets.

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Complexity: ⚫⚫⚫⚫⚪

Speed for investment to pay off: medium

Control over investment: medium to high

Budget: $$$

Mutual Funds

Mutual funds pool money from many investors to invest in various securities, including stocks, bonds, and other assets. Although a mutual fund's portfolio is usually diversified across markets and industries, investing in them still carries some risks. If the securities held by a fund go down in value, you could lose some or all of the money you invested in it. Mutual funds are more complex than savings accounts, as they require you to choose a fund based on investment objectives and may include additional fees and expenses.

Mutual funds can be an expensive way to invest, with some funds setting purchase minimums at several thousand dollars. They are also quite slow to pay off, as the returns are generated through capital gains and dividends over an extended period. Since you delegate financial decisions to fund managers, the level of control for this type of investment is usually quite low.

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Complexity: ⚫⚫⚪⚪⚪

Speed for investment to pay off: slow

Control over investment: low

Budget: $$$$

Real estate

Investing in real estate involves buying and managing land, a flat, or a house to either rent it or wait for it to increase in value over time. Real estate investments are highly complex and require you to thoroughly research the market, maintain your property, and manage tenants. The value and rent price of real estate may decline over time or fall abruptly when a property bubble bursts. Real estate investments are generally expensive, as property purchases require a significant amount of capital and often involve taking on debt through a mortgage.

Real estate investments typically pay off slower compared to Forex and stocks, as it takes time to find tenants, generate rental income, and wait for property appreciation. The level of control over real estate is usually medium, as you can choose what to do with the property, make decisions about rent pricing, and manage it yourself. However, you are not safe during bear market periods and property bubble bursts.

Whatever investment option you choose, it's important to develop a habit of diversifying your investments regardless of your portfolio's success at the moment. Take into account the minimum deposit, the speed for the investment to pay off, your control over it, and the level of independence the investment will give you from the situation in the markets, especially in such turbulent times. Remember also to always study new investment methods and develop an investment strategy employing multiple risk management techniques.

Risk: ⚫⚫⚫⚫⚪

Complexity: ⚫⚫⚫⚫⚫

Speed for investment to pay off: very slow

Control over investment: medium

Budget: $$$$$