Now that we have survived the 'Mayan doomsday', the focus should shift on planning our investments wisely, so that we don't face a 'financial doomsday'! Although 2013 started on a good note with the Congress passing the tax laws at the eleventh hour, there is a long way to go as far as investments are concerned.
The previous year was unpredictable to say the least, and some investors learned hard lessons about the need of patience, perseverance, and sound strategy in the financial market. In 2013, the aim should be to focus on those investment options, which have a likelihood of offering decent returns. In the following paragraphs, we will take a look at some of the best investments for 2013.
Gold and Precious Metals
Finance experts are of the opinion that gold will continue to grow in 2013, and investing in gold and silver can be beneficial for investors. By the end of 2013, we can expect gold prices to reach anywhere between $1900 - $2100 an ounce. Considering the fact that gold price at the end of 2012 stood at $1,675 an ounce - up by approximately 6% from December 2011 - investors can expect decent returns on their investment this year as well. In 2007and 2008, the worst years of sub-prime crisis, gold saw an increase of 15% and 25% respectively. Another statistic that substantiates the claim that gold is a sound investment is the fact that from $272 an ounce in 2000 to $1675 an ounce in 2012, gold has grown steadily - year in and year out. Silver too, has grown from $5 an ounce in 2000 to $30 in 2012, and is another option for investors in 2013.
The reason behind the high demand for gold and silver is that most people look at these not only as an investment, but also as a means of security in the economically-turbulent times. Also, central banks in developing countries, in a bid to diversify their reserve holdings, invest heavily in gold and silver. The high demand for gold makes it an asset which you should consider in 2013. Gold, silver, and other precious metals can be traded in the stock exchange through exchange-traded funds. Some ETFs you might you can consider in 2013 are:
- ProShares Ultra Gold - UGL
- ETFS Physical Swiss Gold Shares - SGOL
- SPDR Gold Shares - GLD
- iShares Silver Trust - SLV
- PowerShares DB Silver Fund - DBS
- PowerShares DB Precious Metals Fund - DBP
Expected Returns: 11% to 20%
Risk: High
Mutual Funds
Investors are upbeat about the prospects of earning a decent yield from mutual funds in 2013. In the previous year, the average return for domestic mutual funds was 13.87%. Global mutual funds, on the other hand, yielded 17.68% on an average. Analysts say one of the factors people will invest highly in mutual funds in 2013 is that the trust and momentum in equities has taken a hit because of the sub-prime crisis, and people are now wary of entering the equity market. Some of the recommended mutual funds for 2013 are:
- INTECH US Growth A - JDRAX
- Hennessy Focus Investor
- GMO US Growth Fund III - GMGWX
- Delaware Large Cap Value Eqty
- Artisan Global Value Inv - ARTGX
- ING Corp Leaders Trust - LEXCX
- JPMorgan Mid Cap Value A - JAMCX
- Sit MN Tax Free Income - SMTFX
- Vanguard Health Care Inv - VGHCX
- Fidelity Adv Real Estate Income A - FRINX
- Fidelity Adv Consumer Staples A - FDAGX
- Fidelity Select Pharmaceuticals - FPHAX
- Invesco Select Companies A - ATIAX
- James Advantage Small Cap Value A - JASCX
- Wells Fargo CoreBuilder Shs - Srs M - WFCMX
- Oppenheimer Limited Term Muni A - OPITX
- Janus Global Life Sciences A - JFNAX
- Oppenheimer Limited Term Muni A - OPITX
- Oppenheimer Ltd Term NY Muni A - LTNYX
- Value Line Asset Allocation - VLAAX
- T Rowe Price Cap Appreciation - PRWCX
- ING Morgan Stanley Gbl Fr A - IGFAX
- Smead Value Fund Investor - SMVLX
- Vanguard Cons Stap Idx Adm - VCSAX
- SEI Inst Inv Managed Vol Fund A - SVYAX
- Wells Fargo CoreBuilder M - WFCMX
- Fidelity Adv Real Estate Inc A - FRINX
Expected Returns: 8% to 12%
Risk: Moderate
Blue Chip Stocks
Blue chip stocks can be a safe bet for people who are looking for a long-term investment. These stocks have the reputation of performing reasonably, even during an economic downturn. These stocks have offered a steady Return On Investment (ROI) in the past, and there is every likelihood of the situation remaining the same in 2013 as well. Many will argue that investors can get higher ROI if they invest in emerging, relatively lesser-known companies, but the risk will we relatively higher. The government has just averted the fiscal cliff, but future tax laws can deeply impact the performance of the stock market, and if that happens, penny stocks will be the first ones to take a hit. Even if blue chip stocks go down, investors shouldn't hit the panic button as the fundamentals of these companies are pretty strong, and there will always be scope for a recovery. Taking into account all the considerations, we will advise investors to have blue chip stocks in their portfolio. Some stocks which you can consider are:
- Southern Copper Corp - SCCO
- NuStar Energy L.P. - NS
- AT&T Inc - T
- STMicroelectronics N.V. - STM
- Lockheed Martin Corp. LMT
- Eli Lilly & Co. - LLY
- Paychex Inc - PAYX
- H & R Block, Inc. - HRB
- Goodyear Tire & Rubber - GT
- United Parcel Service Inc - UPS
- Caterpillar Inc. - CAT
- Cummins Inc. - CMI
- Apple - AAPL
- Bank of America - BAC
- McDonald's Corporation - MCD
- The Boeing Company - BA
- Target Corporation - TGT
- Hewlett-Packard - HPQ
- Cliffs Natural Resources - CLF
- American Capital Agency Corp - AGNC
Expected Returns: 10% to 15%
Risk: High
Municipal Bond Funds
Meredith Whitney may have been correct on speculating the sub-prime crisis, but her prediction on municipal bonds defaults is yet to materialize. Most investors still rank municipal bonds highly as investment options for 2013. One of the prime reasons is the tax-exemption that munis have to offer. The default rate on munis is lesser than that on corporate bonds, so an investor has a pretty high chance of receiving his investment upon maturity. We suggest munis as a safe investment, because historically, most bonds have been able to retain their value, while earning interest for the investor at the same time. Some states whose municipal bonds are worth considering in 2013 are South Dakota, Iowa, Tennessee, and North Carolina.
Expected Returns: 4% to 7%
Risk: Low
Choosing your investments wisely can be the key factor in 2013. We advise you to do your research before making an investment. Wishing you an economically prosperous 2013!
(Disclaimer: This article is meant for informative purposes only, and should not be substituted for the advice of an appropriately qualified professional. We do not promise, or guarantee that using this information will lead to a particular outcome/result. Readers are advised to use their own discretion.)
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