If you're planning to invest money during 2017, you may be wondering how to take advantage of the good and avoid the bad. And, while investing is never a sure thing, there are some ways to minimize your risk and maximize your reward. Here are three pro tips for any casual investor.
Glean from Politics. Based on the expectations about the new president and the incoming administrations, it may be easy to see which sectors of the stock market are primed to do better in 2017. This includes the financial sector -- due to expected deregulation -- and the construction sectors -- due to proposed infrastructure spending. While it may be hard to know which individual companies will benefit from proposed legislation or executive actions, you can often choose ETFs (exchange traded funds) or mutual funds that invest in the sector as a whole. This type of investing limits your exposure to individual stocks and instead allows you to make money from overall sector performance.
Consider Trends. Outside of political changes, other factors often make certain sectors more likely to grow in the years ahead. If, for example, a trend toward people desiring to show off and enjoy their wealth comes to fruition, things like high-end goods and housing are probably going to benefit. Technology continues to be a growth sector as more and more people seek more and more gadgets and technological improvements globally. Consumer staples are another good area to look for companies that produce things that consumer always need to buy, no matter what the market looks like. If you're not sure how to read trends in the economy, work with a qualified investment planner to find the right mix for you.
Invest Outside the Market. If the ups and downs of the stock market make you nervous, it's a good idea to diversify by investing some money in alternatives. Less risky options for investing in ways not directly affected by the stock market include purchasing rental property or investing in a small growing business. Depending on your age and risk tolerance, you may want to include some low-risk bonds in your portfolio in order to protect against large market drops. For an even safer -- and potentially more long-lasting -- investment in a secure future, consider investing time and money in your own education, a side business, or improving your marketable skills.
While many experts and investment planners agree that 2017 will be a financially unpredictable and somewhat wild ride, you can benefit both from market exuberance and from a little bit of caution as you invest with an eye to your short-term and long-term future.