Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
5 Investments That Stand the Test of Time
Ruby Layram
13th Sep 2024
If there’s one thing I’ve learned so far this year, it’s that investing in trends is a risky game!
At the start of 2024, it seemed like everyone was jumping on the AI bandwagon in hopes of seeing huge returns. And this worked – for a short while!
However, more recently, big tech stocks seem to have fallen into troubled waters and growth hasn’t been as monumental as investors originally hoped for.
If you invested in AI stocks at the beginning of the year, you may have experienced a bit of volatility. This is very normal for growth sectors, which have the tendency to experience ups and downs. However, investing in volatile markets isn’t for everyone – particularly if you are close to retirement and want to protect the value of your pot!
The problem with investing in trends
Investing in trends might be exciting, but they can be incredibly volatile. Think of cryptocurrency in 2017, or meme stocks in 2021. They saw big gains, but they also caught a lot of people out.
The problem with these types of investments is that they are very vulnerable to investor sentiment – particularly sentiment that can be swayed by social media!
Just look at the impact that Donald Trump’s latest campaign is having on the price of Bitcoin! All it takes is one negative comment and the price goes down.
When you invest in trends, you’re essentially gambling that sentiment around that certain corner of the market will stay positive. And while there’s always a chance it might, there’s an equally good chance that bad press will cause a price correction.
The real key to wealth-building lies in investments that endure ups and downs, offering both growth and stability over the long term.
5 investments that stand the test of time
So, what investments provide a bit more stability for investors who want to protect their wealth?
Here are 5 investments that have managed to stand the test of time.
1. Gold
Gold has been a go-to for thousands of years, and there’s a good reason for that.
It’s tangible, finite, and globally recognized as a store of value. Unlike paper money, which can be printed endlessly, gold remains scarce, and it tends to keep its value, especially during times of inflation or economic uncertainty.
Why is gold so resilient?
Well, people tend to turn to it when markets seem uncertain. In fact, it’s often referred to as a “safe haven” because when stocks plummet, gold often goes up.
Whether you invest in physical gold, gold ETFs, or gold mining stocks, it’s a tried-and-true way to protect your wealth over the long term.
2. Bonds
Government and corporate bonds might not be the most exciting investment on the planet, but they’re steady, reliable, and perfect for balancing risk.
Bonds are like loans that you give to governments or corporations, and in return, you receive interest payments.
Government bonds, in particular, tend to be incredibly safe because they’re backed by the government. The returns on these investments might be lower than exciting stocks, but bonds offer stability.
Plus, they provide a predictable income stream, making them a favourite among retirees.
3. REITs
REITs allow you to invest in the real estate market without the headaches of owning physical property. When you invest in a REIT, you invest in shares of companies that operate income-producing real estate.
REITs tend to be resilient because people always need places to live and work. Plus, they offer a unique advantage: they’re legally required to pay out a share of their taxable income as dividends to shareholders.
So, not only do you get the benefit of long-term appreciation, but you also enjoy a regular income stream.
4. Healthcare stocks
The healthcare industry isn’t going anywhere anytime soon. With an ageing population and constant medical advancements, the demand for healthcare services and products is only going to grow.
Investing in healthcare stocks means you’re putting your money into companies that provide essential services, from pharmaceuticals to medical devices to health insurance.
What’s great about healthcare stocks is their ability to perform well even when the economy isn’t doing great. People still need medication, surgeries, and treatments, no matter what.
This makes healthcare one of the most trend-proof sectors out there.
5. Consumer staples
From toothpaste to toilet paper, consumer staples are products we use every single day, regardless of the economy.
Investing in companies that produce these essential items—think Procter & Gamble, Nestlé, or Unilever—means you’re putting your money into businesses that will always have demand.
Consumer staples companies are known for their stability and steady dividends, making them a solid choice for conservative investors. These businesses tend to withstand bear markets better than others because, let’s face it, we’re all still going to buy shampoo, cooking ingredients, and cleaning products, even when the economy is a bit shaky!
The importance of diversifying your portfolio to hedge against inflation
Now, while each of these investments has stood the test of time, no single investment is foolproof.
That’s where diversification comes in.
By spreading your investments across different asset classes you reduce your overall risk.
Remember, there is no guarantee that the markets will behave in your favour and even the most stable sectors can experience downward shifts. The key is to diversify, trust the process and avoid falling for the pitfalls of social media panic!
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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