Prepared by AMarkets online broker
To make your investment portfolio work for you and bring you a steady income, you should revise it from time to time. Sometimes, to restore your portfolio and its performance, it enough to simply review and adjust asset proportions. But sometimes you need to alter its composition or even add new investment instruments and asset classes. When it comes to asset allocation and changing the composition of an investment portfolio, investors are always left with one major question: which new instruments to add?
We recommend you to pay attention to 5 investment instruments, which can increase your portfolio profitability and improve its performance in 2018:
- Dividend aristocrats
- ETFs (exchange-traded funds)
- Popular stocks
All of these instruments contain attractive investment assets that will help you properly diversify your portfolio and bring stable profit. Let’s take a closer look at these instruments.
High-quality stocks of reliable, well-established companies should be in every portfolio. Such companies pay the biggest dividends, that have a strong potential for long-term dividend growth and capital appreciation and can significantly increase investor’s profit. They are known as Dividend Aristocrats because they have been increasing their dividend payments for 25 consecutive years. To find the list of all companies that fit into this category, just type «dividend aristocrats» in the search box of any search engine.
Having reviewed the reports and analyzed the indicators of most of the dividend aristocrats, we suggest you add McDonald’s stock (MCD) to your portfolio in 2018.
As we can see in the chart, the company’s stock has been steadily climbing for 10 years in a row, and this trend is far from reversal. It is currently trading at 163$ per share.
Technical analysis of McDonald’s daily chart gives all reasons to expect another growth.
The price is currently attempting to escape the bullish trend, but if the candle closes below the lower trendline, growth will continue. If trading closes below this line, the price may slide down to 155.47 level. Further downward movement, however, will be held back by the strong support level, and the price will resume its growth.
The fundamental analysis says in favor of further stock growth as well. McDonald’s Board of Directors has approved a 7% dividend increase in September, as a result, the shareholders’ dividend payments in December came with a 2.3% yield.
But wait, there’s more. The company’s stock received three bullish ratings from top analysts from Nomura, Robert W. Baird and Credit Suisse. According to them, another increase is to come – from $190 to $198 (12% up from the current value).
Some analysts give even more optimistic predictions. Cowen & Co analyst Andrew Charles says McDonald’s stock is the best choice in 2018. He notes that the firm’s “survey data shows McDonald’s exited the fourth quarter with the strongest value perceptions relative to quick service peers.”
Besides McDonald’s Corporation, it’s also worth paying attention to Chevron (CVX) and AMAZON.COM (AMZN), which also registered lucrative dividends yield at the end of the last and the beginning of this year.
If you don’t want to dive deep into stock analysis, you can just take our advice and add McDonald’s to your portfolio, or pick one of the ready-made portfolios, created by AMarkets specialists.
Exchange traded funds take their rightful place among the best investment opportunities in 2018.
An ETF (Exchange Traded Fund) – is a fund that owns the underlying assets and divides ownership of those assets into shares. One can invest in indices, foreign currency, shares of stock, bonds or even basket of assets like an index fund.
At the same time, hundreds of promising indices and stocks of popular companies from any industry and country can be gathered in one fund. Therefore, the ETF can be considered a ready-made asset portfolio, and you can easily add to your own investment portfolio.
It’s worth noting that ETF shares are evenly distributed among all shares or indexes in the portfolio, which gives you a well-diversified portfolio. Thus, losses in stocks of some companies can be compensated with profits made with other assets and can even bring in additional income.
Besides, due to the fact that ETF shares are traded on stock exchanges, they have a high liquidity and can be bought as a regular share. The ETF share has its own value, which varies throughout the day and correlates with the underlying assets’ value.
All this makes ETFs a reliable, profitable and at the same time affordable investment solution which is definitely worth considering when building or adjusting your investment portfolio.
Among all ETFs, the most attractive in 2018 looks to be the TLT (iShares 20+ Year Treasury Bond), which invests its assets in US government bonds. In fact, this ETF seeks to track the investment results of the ICE U.S. Treasury 20+ Year Bond Index. The fund generally invests at least 90% of its assets in the bonds of the underlying index and at least 95% of its assets in U.S. government bonds. The index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity greater than twenty years.
There are several reasons why we have chosen this particular ETF. Look at the monthly TLT chart (iShares 20+ Year Treasury Bond):
TLT prices have been successfully climbing for the last 10 years, which makes this ETF a decent long-term addition to your investment portfolio.
If we take a look at short-term periods, to determine if we should home in on this instrument, we will see positive technical analysis signals as well.
In the weekly chart, the TLT is trading around strong support of 117. The price has already bounced off of this level 4 times and is likely to do it again, which will trigger another growth to resistance at 128.
From the fundamental point of view, we can mention the TLT’s decline in the second half of 2017, but it’s more likely an exception than an actual trend, as most investors keep buying long-term government bonds, despite a short-term plunge in corporate bonds.
In addition, bonds with maturity greater than 20 years and 10-year bonds give signals of further growth. After the decline in October 2017, they have been showing a large growth in the last consecutive nine months.
All this makes long-term bonds and TLT ETF an attractive pick for your investment portfolio. You can trade it with any reliable broker, such as AMarkets.
Cryptocurrency market is growing so rapidly, that it would be a huge mistake to leave it out. New cryptocurrencies are introduced every day, many companies are jumping on the ICO bandwagon. ICO is similar to IPO with one main difference – instead of securities tokens are being issued. The owners of these tokens sell them for cryptocurrency or dollars later or receive dividends from the company.
Some of the companies are quite promising and have a high yield potential. As a result, one can make a hundred or thousand percent profit in a few days, and it is not uncommon. At the same time – it’s a high-risk market and there are a lot of scams here. Therefore, add this instrument to your portfolio in small proportions and with caution.
Before investing in any of the tokens, you should make a thorough research first. If the project looks shady and its prospects are vague, you should probably stay away from it, even if it founders promise you gold mountains.
The safest investment solution would be choosing among the already existing projects which have already gained popularity in 2018: Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Ripple.
Having looked at all of these cryptocurrencies, we have chosen Ripple (XRP). After its breakneck appreciation, this cryptocurrency plummeted as sharply in a very short period. Now, it is completely stable and shows all signs of possible growth.
According to the technical analysis, Ripple is currently trading close to the strong support level of 0.4700. The price has already bounced off of this level in early December of 2017 and at the beginning of April 2018. It’s very likely that the support will hold again, which means that the price will rise further up, to resistance at 0.6800.
Fundamentals signal further Ripple’s growth for two main reasons:
- Market cap – the currency holds the third place in Top 10 cryptocurrencies by market capitalization.
- Cooperation with the banking sector.
Ripple has recently entered into the cooperation agreement with MoneyGram. This international payment system is now testing Ripple’s blockchain technology to use in its transaction processing. Investors reacted to this news positively – the payment system’s shares rose by 8% and Ripple itself stopped falling and is currently trading in a sideways range.
It’s also worth keeping in minds that Ripple continues to penetrate the financial sector. Among its partners are already such major banks as Orix Bank, Bank of America, UAE, Royal Bank of Canada and others.
Other financial institutions are also investing in this digital coin. A group of companies has recently invested 9 million dollars. We should also remind you that the project partnered with Silver Bullion and offers a service that allows to store precious metals and convert them into any currency.
As a result, we see all signs of further uptrend on the one hand, but the price is barely moving on the other, which is probably the calm before the storm. It’s not surprising that investors are seriously considering adding Ripple to their portfolios – word on the street is that this digital asset will be trading from 14 to 1000 dollars per coin in the long-term.
Amid cryptocurrency rush, we would like to turn your attention to NVidia stock, which rose by 300% in 2017 and keeps climbing in 2018.
Many may think, that the surge is fading and that it’s time to sell. Don’t make any snap decisions. If you already have this asset in your portfolio – don’t get rid of it yet, and if it’s not a part of your portfolio – consider adding it. There’s a number of technical and fundamental reasons, that back this recommendation.
NVidia daily chart indicates that growth is on the way.
The stock has held above 252 dollars per share level, which says in favor of strong bullish potential. The chart’s candlestick pattern signals further growth too. Taking into account, that the pattern has formed close to resistance which is now acting as support and the fact that similar pattern occurred at the previous support, it becomes obvious, that the stock prices will keep rising.
Fundamental analysis offers three main arguments in favor of NVidia growth:
- The most important driver is continuing demand for GPU from crypro miners. Despite the recent correction in almost all cryptocurrencies, the demand remained solid, with just a small slowdown. As a result, the Company reported a record quarterly revenue of $3.21 billion for the three-month period on April 29, which is 66% more compared to the same period last year and 10% more than in the previous quarter. The company’s net profit in the first quarter of 2018 amounted to 1,244 bln dollars, 145% higher than in the first quarter last year.
- The company released a product line of cheap GPU, which will allow it to expand its presence in the market.
- NVidia Tegra processors didn’t sink into oblivion – they are still being actively used by car manufacturers and gaming console companies, only increasing the company’s revenue. In 2017 it amounted to 7% of the total NVidia revenue and is expected to grow even more in 2018.
Based on all these facts, we can say with certainty that NVidia stock prices will only keep growing and it’s is definitely worth adding this instrument to your investment portfolio.
Crowdfunding is one of the mainstream trends, which shouldn’t be overlooked. It is a fast way to get financing for a small business and startup projects and a good investment opportunity for those who want to invest their money and receive regular dividends using special platforms like KickStarter, SindyCateRoom, StartTrack, GoFundMe and others.
One can invest in this popular niche having a capital of just $ 100. Some sites set the investment threshold from $ 1500. Therefore, each investor can choose among the projects with different levels of investment. One can build a whole portfolio made of startup investments, which will be part of their main investment portfolio.
Such investments can bring a different income depending on the conditions.You can invest in a stable project with a monthly income of 17-30%, which will help you balance your investment portfolio, or pick a risky but highly profitable startup, which can bring 1000% in a few months or nothing at all.
In this article we have covered the most promising investment instruments. However, those are not all the investment opportunities, and even among the instruments that we suggested there are many different assets to invest in. We tried to choose the instruments with a high profit potential, which can be safely added to your investment portfolio in accordance with your risk management.
Before taking our advice right away, we recommend you to take your time and do your own research – analyze the suggested options yourself before adding any of them to your portfolio. The markets are extremely volatile and the situation may change at the time you read this article.