Traders and investors are looking for a solid footing in these uncertain times
As we gradually put the specter of the coronavirus behind us, the one thing that has undoubtedly defined the post-pandemic era is the huge proliferation of retail traders and investors in financial markets. Indeed, in terms of quantities, the number of ordinary people turning to a wide variety of financial instruments is simply unprecedented. To put things into perspective, Citadel Securities estimates that retail players now make up about 25% of the total stock market. In developing markets, however, these numbers are even higher.
While this impressive growth in equities is certainly remarkable, the clear leader in terms of attracting new capital has been cryptocurrencies. After a whirlwind 2021 that saw them reach heights unimaginable before, cryptocurrencies have seen a newfound popularity among institutional and retail investors.
Looking at the current economic climate, it’s only natural that an ever-increasing number of Joe and Jane Bloggs are more willing to consider risky options. With inflation now in double digits and savings account rates effectively in negative territory, the lure of massive gains in the stock and crypto markets is very strong. In fact, it would seem that even the most conservative savers have been tempted by the huge returns generated by these markets in recent years. In this article, we’ll look at what’s behind the hype surrounding the financial markets right now, as well as methods to maximize your potential returns as a trader or investor.
Forget the past
Good financial planning and saving money have been inextricably linked for decades, but the new era of near-zero interest rates ushered in after the Great Financial Crisis of 2008 had already begun to challenge that paradigm. Fast forward to 2022, and virtually every major currency is now plagued by very high inflation. As a result, holding cash savings for the long term has simply become financially ruinous. If we look at it in a broader context, consumer prices for everyday items are rising at a rate of at least 10%. Meanwhile, even the most attractive savings accounts pay a maximum of 2% per year on deposits. Seen through this prism, you don’t have to be a qualified accountant to determine that your total wealth is actually decreasing by more than eight percent each year.
It’s no secret that some of the biggest returns you can get come from long-term investments.
Unlike the stunning returns seen in the stock market last year, the growing appeal of financial instruments is evident, even after factoring in the gains wiped out by the significant correction we’ve seen since the Fed began to tighten. Monetary Policy. Undoubtedly, many of the new entrants to the stock market were somewhat hesitant at first, but now they are buying ETFs, indices, and even individual stocks with impressive confidence. While the US regulator is definitely trying to get inflation under control, it could take several months and several rate hikes to get there. Until then, securities will remain an indispensable part of the portfolio of anyone of working age.
The transition to digital 2.0
If you have taken a look at the financial markets over the past two years, you will surely have seen the extent of the hype around crypto. This all-new asset class has grabbed headlines in 2021 for its rocket-propelled growth, increased utility, and widespread adoption.
Naturally, this market has been much more volatile in its swings than stocks. As a result, the gains were much more dramatic. However, the flip side is much greater uncertainty. For example, despite being up over 90% at one point this year, BTC is currently down over 40% from this recent all-time high. Nevertheless, now that many institutional investors are more or less convinced of the need for crypto allocations, we can expect several cycles of growth for this still relatively young class of instruments. In fact, despite this current downward trend, many large pension plans, including the Houston Firefighters Relief and Retirement Fund, are actively buying digital currencies.
The other key appeal of crypto is its usefulness, including as a store of value. Despite the inherent volatility of cryptocurrencies, many people still tout them as potential inflation hedges. This perception therefore sees an increasing number of people adding bitcoin and other non-inflationary cryptocurrencies to their portfolios in line with typical gold allocations. The usefulness of digital currencies and blockchain in general is even gaining traction in the upper echelons of government, as a group of nations prepare to release their own central bank digital currencies (CBDCs), which are essentially versions of their existing fiat currencies. Until government-backed stablecoins go live, there are of course various private algorithmic stablecoin projects like Terra and Tron that offer a quick and easy way to buy and hold US dollars.
Beware, though: there are still plenty of scammers operating in this largely unregulated space, and you’d do well to seek out a reputable broker like Libertex, which has a user-friendly app that lets you trade your crypto CFDs from anywhere. any device. .
Sort the wheat from the chaff
As trading and investing have grown in popularity in recent years, the retail market has been flooded with a plethora of companies offering financial and brokerage services. Unfortunately, not all of them are as reputable as you might expect, so your choice of broker can make a huge difference to your potential returns. Libertex offers commission-free crypto CFD trading, which means its users only pay the spread (the difference between the bid price and the ask price) when buying or selling digital currencies on the Libertex platform. In contrast, many of its competitors will charge transaction, exchange, and commission fees on every purchase or sale of cryptocurrencies.
Naturally, the impact of these practices is exponential and can ultimately reduce the funds used to invest by a significant margin. Additionally, since many new crypto investors are primarily holders of stocks or other more traditional instruments, Libertex provides the added comfort and convenience of allowing users to store their entire portfolio in one easily accessible location. accessible. Libertex has been connecting everyday people to a host of different financial markets for almost 25 years now and is able to consolidate all your holdings into its user-friendly, multi-award winning mobile or desktop app.
Diversity in all things
We all know how exhilarating and exciting short-term trading can be. The hands-on action involved in frenetically changing pending orders, the rush of real-time price changes. But all of this comes at the cost of exponentially higher risk. It’s no secret that some of the greatest returns you can get come from long-term investments.
Libertex recognizes this reality and wishes to build lasting and mutually beneficial relationships with its customers. It is for this purpose that the company has created its type of Libertex Invest account. Libertex Invest allows users to make long-term stock purchases, completely reducing additional costs, except for the purchase of the actual shares. This means that there are no transaction fees, commissions or other hidden costs. Clients can even receive dividends on their stock holdings. This means you can buy and hold blue chip stocks like Microsoft, Apple and Tesla or even indices like the S&P 500 or Nasdaq on some of the best possible terms in the industry.
Even the most dedicated traders have to admit that it’s always a good idea to have at least some of your eggs in a low-risk basket, just in case. That said, the brand new Libertex Invest product now means that you can keep your active trading and passive investment portfolios both totally separate and yet conveniently interconnected while benefiting from the best possible conditions for each type of account.