While the most recent crypto bull run may have caught the attention of casual investors as it extended beyond 2020 and into the first two quarters of this year, the events of the last week have reinforced the inherently volatile nature of this asset class.
More specifically, a recent crash has seen crypto losses eclipse a staggering $1.3 trillion, with this coming just two weeks after the market achieved an all-time high.
With this in mind, you may be better served by targeting more staid and traditional asset classes in the near-term. These include:
- Stocks and Funds
We’ll start with stocks and funds, which should arguably comprise the majority of any balanced investment portfolio (especially one that aims to deliver sustainable and long-term gains).
Typically, stocks represent ownership in profit-generating and private companies, affording investing a secure store of wealth that can hold particular value during times of economic tumult.
There are various types of stocks available depending on your risk outlook too, from emerging small cap entities that have the potential for high growth in the future to blue-chip dividend shares that deliver consistent (albeit modest) gains.
Arguably, bonds provide an even greater store of long-term wealth, as they can mature over a period of 10, 20 and even 30 years. There are various iterations of this asset class too, including corporate, government, municipal and even international bonds.
- Exchange Traded Funds (ETFs) and Mutual Funds
While one of the main benefits of stocks is that they offer access to a tangible and secure store of wealth, it is possible to invest in such entities without assuming ownership of the underlying financial instrument.
You can achieve this by leveraging mutual funds and ETFs, which essentially serve as individual portfolios that include a large number of different stocks and bonds. Such funds offer access to a balanced and instantly diversified selection of assets, which can help to minimise risk and exposure in real-time.
What’s more, such funds are often professionally managed, creating an additional layer of security when investing your finds.
This type of vehicle is particularly ideal for beginners, who may be new to the market and struggle to grasp the complexities of investing.
- Forex and Currencies
We close with the forex market, which is a vast, global entity in which more than 170 currencies can be traded on a daily basis. This differs from the previous entries on our list in numerous ways, especially from the perspective of volatility, leverage and the liquidity of major currencies such as the US dollar (USD).
Currencies are classed as derivative assets that can be traded on margin, which affords two critical advantages to traders.
Firstly, forex traders don’t have to assume ownership of the underlying currency or pair, enabling them to profit through speculation and the various price movements that occur every day.
Secondly, the margin-based nature of currency trading lets traders secure inflated leverage (often up to 100:1), which means that they can control disproportionately large trading positions with relatively small cash deposits.