With savings rates depreciating and the economy contracting, it is becoming increasingly difficult to make the most of your disposable income in the modern age. In fact, with lenders increasingly looking to optimise their gains by minimising savings rates (in line with the BOE’s base rate of just 0.5%), there is an argument to suggest that it is more effective to invest money of you are to secure a return in 2017.
This carries additional risk, however, so you will need to choose your market and assets carefully if you are to succeed. With this in mind, here are three options that are likely to be the most fruitful during the next 12 months: –
While it has yet to be proven that new U.S. President Donald Trump will favour a slightly weaker American dollar, the omni-potent greenback is expected to face considerable resistance in 2017. This is largely thanks to the rise of emerging and commodity currencies, with the Canadian and Australian dollars (along with the Brazilian real) likely to rally hard against for established options.
This will create further diversification in the forex market, which is already one of the most liquid and accessible entities available. The derivative nature of currency also makes it possible for traders to profit as the market depreciates, so this is definitely something to keep in mind in the current climate.
- Emerging Economies
We have already touched on the prominence of emerging and frontier currencies in 2017, but evolving economies such as Brazil and India will also offer additional opportunities to traders. This is particularly true in the case of Brazil, which also enjoyed a stellar 2016 and continues to improve is commodity output while maintaining a cheap marketplace. The same principle applies to India, which is home to an ever-diversifying range of commodities that offer outstanding value to investors.
- Hedge Funds, Bonds and Emerging Market ETFs
In terms of equity, emerging market bonds were the second-most popular option for investors during 2016. Emerging market ETFs also delivered a cumulative, positive fund flow of $1.8 billion, which in turn highlights the lucrative nature of these options when compared to alternative, perhaps more traditional, asset classes.
This is set to continue in 2017, while hedge funds are also likely to rebound and record improved performances in the New Year. These types of fund are also relatively low-risk, so they are ideal for investors with smaller bank rolls or more modest expectations.