Smart Investments for 2012

By Joyce Morse for HeadlineFinancial.com

With the current state of the economy, it can be hard to know where to invest your money to still make a profit.  It can make you just want to hide it so that it doesn’t disappear.

However, every smart investor knows that you have to take a risk to make money.  The trick is to know which investments carry an acceptable level of risk and which ones aren’t worth it.  Here are two types of investments that you will want to consider adding to your portfolio in 2012.

Technology Stocks

This can seem like a scary investment because you never know where technology is going, but it can also be extremely profitable.  Why should you consider technology for investment?  Because it has strong growth potential.

Stock market chart rising
What stocks are good buys?

Just look at Facebook and how it has exploded and changed the world.  Facebook is more than just a product; it’s a brand.  Today people say “Just Facebook me” as if it is a term and not a website.

So, how do you know which technology to invest in?  This is one area where the risks can be high, but so can the rewards.  Here are a few tips for investing in this growing area.

  • Know the product.  Does it have a solid foundation with a knowledgeable leader?
  • What do others say about the technology?  Get a lot of feedback before you put money into something.  For every technological advancement that has been successful, dozens of others were failures.
  • Is it innovative?  Look for something that’s new and different that could revolutionize the way we do something.
  • Is it an improvement?  Skype, Instaprint, and Cloud storage are all inventive ideas that improve our lives.  While that doesn’t make them a guarantee to be successful, it does improve their possibilities.
  • Talk with an expert.  Before you put money into anything, you should consult with an expert in the field.  An investor is not an expert in technology; an IT person is.  Find out what they think about the new technology and if it is a sound investment.

Why Stocks are Better than Bonds

Many investors will ignore the stock market in favor of the security of bonds in a down economy.  However, the experts say that stocks are still the better way to go.  They expect that bonds in the next 20 or 30 years will only see a return of zero for best case scenario.  More probably is that they will have a negative return.

S&P stocks sold at 13 times the estimated earnings for 2012 at the end of 2011.  Compare this to 1999 when they were selling at 33.5 times.  This shows that there is potential for growth for investors.

You may not want to put as much money into the stock market as in the past, but experts believe that now is a good time to invest in stocks for the long term results.

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