Some investors choose an all-in approach, checking their portfolio daily. Others might be more comfortable with a set-it-and-forget-it approach. Regardless of approach, keeping tabs on the latest financial trends can be illuminating … and fun.
Investors can compare their gut feelings to the “experts,” and see how much influence the top influencers actually have.
More significantly, understanding why things go the way they do might help investors make future investing decisions — and perhaps help keep emotions in check when the markets wobble.
Of course, it helps to do some homework before taking any specific prediction or recommendation too seriously. Studies have shown that timing the market — which means predicting the market based on economic data and technical indicators — doesn’t work.
Consider looking at financial forecasting as the big picture and treat the trendspotters as guides, not gods. As with fashion, you might want to know what the pros predict the trends will be, but you don’t necessarily have to wear all those trends yourself.
With that in mind, here are nine investment trends that are getting noticed right now:
Financial technology companies continue to innovate with digital tools such as online banking and investing, mobile money-tracking apps, crowdfunding, person-to-person payment platforms and more — providing products and services that were once only available through traditional financial institutions.
Millennials, especially, embrace personalization and convenience, and you can expect to see startups and established companies working to fulfill their digital dreams.
How disruptive can it get? According to the ABA Banking Journal, new technologies and changing customer expectations are combining to accelerate a cashless trend, and more than 60% of Americans believe they’ll see the death of cash in their lifetime.
Technology is also disrupting the financial advice industry, and algorithm-based advisory technology is gaining in popularity.
Offerings vary, but typically these self-guided, online investing services provide an automated portfolio based on personal preferences and goals.
As the money grows, the portfolio is automatically rebalanced, keeping asset allocation within a predetermined range.
Robo-adviser firms have witnessed triple-digit growth since 2013, according to a team of analysts at Morgan Stanley, and assets under management are expected to keep growing. As data collection and artificial intelligence continue to improve, investors can expect to see a rise in personalization from investing platforms.
But don’t worry about scary cyborgs chasing off human advisers just yet.
3. Fee sensitivity
As technology reshapes the wealth management industry, the cost of investing is falling. Fees for mutual funds and exchange-traded funds have been going down for a while now, and, more recently, the price for advice has been dropping.
“Advice is being delivered at less than 1%,” Jay Shah, Chief Executive of Personal Capital, told The Wall Street Journal in August 2018.
With the increase in online advisory services, clients who used to accept fees as the price of doing business are starting to question some of those costs. And, in particular, millennials are looking for fee transparency.
4. Women and millennial investors
The financial industry is starting to pay attention to the increasing numbers of women and younger earners in the workforce — and tech is offering a new entry point to those who may not have been drawn to investing in the markets in the past.
Why tech instead of an in-person visit? Less jargon, easier access, no hard sell, lower minimums and fees.
And for younger investors, who were raised with technology, it’s comfortable. There is likely to be an increase in products and services designed to appeal to these important demographics.
5. Socially responsible investing
With a new kind of investor comes a new way of investing. Socially responsible investing (also known as environmental, social and governance investing) isn’t exactly new, but it is catching on with both investors and advisors, as consumers increasingly want to put their money where their values are — for example, a fund that focuses on women’s issues, a way of life, like veganism, or a fund that has faith-based requirements.
A 2018 study from Harvard University’s Kennedy School of Government found that socially responsible investing now accounts for $26 trillion, which is more than a quarter of all assets under professional management worldwide.
Advisors may tell their clients to avoid emotion when investing, but there’s also this to consider: For those who tend to feel apathetic about saving for the future, ethically-minded investing might be the motivation they need to get going.
And, of course, there are apps for that, including Goods Unite Us, which provides information on the political donations made by various companies and their senior employees.
Finally, forecasters are keeping an eye out for activity in these three mysterious worlds.
Businesses of all types and sizes are suffering data breaches each year, and identity theft has affected nearly 60 million Americans, according to a 2018 survey by The Harris Poll. That’s up from 15 million in 2017.
Those breaches and hacks are costing individuals and businesses a lot of time, money and trust, leading to a continued search for solutions.
A 2017 PWC poll found that 88% of consumers agree that the extent of their willingness to share personal information is predicated on how much they trust a given company; and 87% said they would take their business elsewhere if they didn’t trust a company to handle their data responsibly.
The importance of cybersecurity is expected to continue and the size of the global cybersecurity market is expected to increase to nearly $281.74 billion by 2027.
Cannabis legalization is rolling out across North America. Eleven states, plus Washington, D.C., have legalized recreational marijuana for adults; a majority of states have legalized medical marijuana; and full legalization came to Canada in late 2018.
It’s still illegal on the federal level in the U.S., but according to a 2019 Pew Research Center survey, two-thirds of Americans support marijuana legalization. It’s a growing industry, but just like any startup, trendspotters warn that investors should watch for hiccups ahead.
In 2018, nearly 60% of Americans had heard or read about the world’s largest cryptocurrency, Bitcoin, according to a joint SurveyMonkey and Global Blockchain Business Council poll, but only 5% actually owned the digital coin.
Most forecasters expect that to change: Cryptocurrencies in general have grown from a few million investors to tens of millions.
The crypto market still has its challenges, though. Watch for a continued focus on fraud and renewed efforts toward regulation.
Investing doesn’t have to be scary
The idea of putting your hard-earned dollars into any investment — whether it’s trendy or traditional — can be daunting. But getting started doesn’t have to be difficult.
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