Is 2016 The Year You Should Be Investing? February 19, 2016My MoneyOff

In contrast to the most common New Year’s Resolution, where the objective is to shed pounds rather than gain them, creating an investment portfolio could well be one of the best decisions you make in 2016. What’s more, long-term financial prosperity is also bound to do wonders for your overall well-being as well.

However, early market turbulence coupled with the prospect of interest rate increases has many people questioning where their money should go. So, is 2016 the year you should be investing after all? And if so, what moneymaking opportunities exist?

The boons and benefits of spread betting. According to IG’s spread betting explanation, this type of investment “enables you to speculate on the movement of a particular asset – like a currency pair, company stock or even an entire index – without actually owning the asset.”

As you are predicting an outcome, the degree in which you are right or wrong will determine the size of your profit. This is especially attractive to certain investors as it’s a tax-free leveraged product, offering quick execution on thousands of available markets.

Open a stocks and shares ISA. At this moment in time, you can invest up to $21,700 in a stocks and shares ISA every tax year, which represents an extremely sound investment opportunity. Dividends are free of income tax, there are no capital gains to pay and you are also free of inheritance tax.

“This must make it one of the most attractive opportunities in the Western world,” notes John Lee, FT Money’s Small-caps columnist. “Assuming one can retain dividends within the Isa and reinvest them, the compounding benefits are considerable. You can build up your Isa portfolio just as you would any normal portfolio and are free to withdraw any money from the Isa at any time.”

Consider foreign markets. A combination of low commodity prices, low inflation and a strong dollar in America should push valuations higher than most expectations. However, there may be even more scope for profit in an emerging market like India according to Adrian Lowcock of Axa Wealth.

“Valuations in both Asia and emerging markets appear attractive relative to the developed markets of the UK and US,” he says. “However, emerging markets are still suffering from a slowdown in global growth due to their export-led economies and build-up of debt.” For this reason, consider investing in the Schroder Asian Income Fund.

Adopt a long-term strategy. Chances are you won’t want to spend hours on end managing your investments. However, this can work to your advantage if you adopt a long-term strategy that favours inactivity. In the opinion of Terry Smith, founder and chief executive of Fundsmith, there are two options you can explore.

“One is to buy an index fund,” he says. “Given that the average active manager underperforms the relevant index benchmark, charges more than an index fund and deals more, this outcome is inevitable. The other route is to invest in a portfolio of equities in good companies which can be relied upon to compound in value over time.”

Photo by Docent | Shutterstock

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