For now, however, it would be wise to choose ETFs in which to invest more conservatively. There is a difference between "growth margin" and "price margin". If you invested in equities after the 2008 financial crisis, you probably already made a lot of money. However, there are signs that value stocks may outperform next year. Why is this?
The main issue here is the time value of money. $ 100 today is worth more than the promised $ 100 next year. In times of very low inflation, which we maintain for many years, the difference is not so great. It was excellent for growth stocks, whose potential value lies mostly in the future. But now that inflation is rising, so are interest rates. This is in favor of bonds and stock prices above growth stocks because inflation should significantly discount potential future returns of growth stocks. Companies with small loan amounts are better able to handle higher interest rates than large loan companies.
Although I am currently investing heavily in buying a home, it is not an investment strategy. I'm going to buy the house I still want to live in for decades because I do not think it's worth it. Higher interest rates lead to higher mortgage rates, which could dampen demand for property for years to come. I would now advise to refrain from speculative investments in real estate.
While the dot-com collapse of 2000 and the financial crisis of 2008 have certainly taught us that rising stocks and homes can be risky investments, it's hard to predict how bad it will go. The truth is that 2022 will be a difficult year to invest. Therefore, I will be careful: investing conservatively in equities is probably currently a better option than growth stocks, cryptocurrencies, NFTs and equities. At the same time, it is not the best strategy to keep money under the mattress during inflation.
