Where To Invest in 2022: Here’s What Experts Say

Updated: March 11, 2022

People are always looking for the best investment. Even more so at the start of the year when everyone’s feeling hopeful and optimistic.

However, choosing the best investment isn’t a straightforward process. It’s never just about putting your money where it could get the highest returns because there are other factors to consider such as your risk tolerance, the amount you’re investing, and your investment horizon.

Having said that, here are some investments that you might want to consider for 2022. Check and see if any of them are aligned with your financial goals. Perhaps, one of them is exactly what you need in your portfolio today.

Cryptocurrencies and NFTs

Blockchain-based assets remain controversial among financial experts. But it’s hard to deny the amount of capital that’s being poured into this market every day.

In November 2021, the cryptocurrency market was already worth more than $3 trillion. Meanwhile, OpenSea, the world’s largest NFT marketplace, currently has an average daily trading volume of over $260 million, which reached an all-time high of over $3.5 billion back in August 2021.

Stock market expert, Marvin Germo, has this to say about cryptocurrencies:

25 years ago, not a lot of people understood what the internet was. Right now, the internet is everything. From Ecommerce, streaming, banking, investing, chat and so much more.

I really believe this is where Web 3, Crypto, NFTs, and the Metaverse are right now. It’s still so early that it looks like a fad, it’s so early that it’s so hard to grasp and understand.

But I really believe that as the apps continue to get built and as the top minds in programming continue to move into this space it’s just a matter of time before we see more and more people transact and use this as part of business and daily life.

I really believe that in the next decade or so, Web 3, Crypto, NFTs, and the Metaverse would be part of everyone’s life. It’s already happening and unfolding before our very eyes.

Technology is a one-way street; it only moves forward. Either we be part of it or be like the fax machine, beepers, analog maps, analog films and get left behind.

Cryptocurrencies and NFTs are high-risk, high-return investments, but it also doesn’t require a lot of capital to start. For as low as P10,000 – you can already trade popular coins and tokens, or invest in a few NFTs. However, I recommend not investing more than 10% of your total portfolio in this asset.

Real Estate Investment Trust (REIT)

Last August 2020, the AREIT had its initial public offering (IPO) in the Philippine Stock Exchange, becoming the first listed REIT in the Philippines. A little over a year later, we now have five REITs listed (AREIT, DDMP REIT, FILREIT, RCR, and MREIT) and a few more are doing an IPO this 2022.

What makes REITs a good investment? Rienzie Biolena, one of the directors of the financial consultancy firm, Wealth Arki, says:

REITs offer guaranteed cash flow to investors, as dividend payments are mandated by law. Even if done in the form of stock dividends, an investor can readily sell it should he need cash. Thus, it is very much recommended for investors that need regular cash flows such as retirees.

Indeed, REITs are attractive because of their passive income, relative liquidity, and good potential for capital appreciation. In fact, as of writing, AREIT’s share price has grown by more than 84% already since its IPO.

However, Mr. Biolena has this to say for those who are investing in REITs for their retirement cashflow:

As with all investment instruments, you have to work backward in order to know how much you should invest. Given your cash needs or targetted amount, you have to do the computation in order to arrive at the amount to be invested, given the choice of REITs.

For example, if you are a retiree and you need P10k a month, multiply it by 12 to get your annual needs. With that, you need P120k of cash per year. And if, for example, your choice of REIT gives a 5% dividend yield, then you need to invest P2.4Mn so that amount can give you that needed cash flow per month.

ESG Investing

ESG investing is also known as socially responsible investing or impact investing. It refers to investing in companies that prioritize optimal environmental, social, and governance (ESG) factors or outcomes.

The assumption is that the financial performance of companies and organizations is increasingly affected by environmental and social factors. And those that seriously consider their impact on the environment, are equitable in their treatment of their human resource, and are ethical with their business dealings, will have long-term support from their customers given that there’s an increasing awareness in the world on these issues.

The concept of “ethical investing” isn’t new. Islamic finance has established investments that comply with Sharia law, which included prohibitions on investing in companies that deal with gambling and weapons, to name a few.

While ESG is a non-financial factor of a company, the past years have shown that portfolios of funds that incorporate ESG and sustainability have performed better than those that don’t.

For example, US financial services firm Morningstar found that for 10 years, 80% of blend equity funds investing sustainably outperform traditional funds. They also found that 77% of ESG funds that existed 10 years ago have survived, compared with 46% of traditional funds.

BlackRock Inc., the world’s largest asset manager, published a report in 2021 that states:

Our conviction is that companies perform better when they are deliberate about their role in society and act in the interests of their employees, customers, communities, and their shareholders.

In July 2021, the Philippine Stock Exchange announced that they’re set to introduce new stock indices, which include one specific to companies that pass ESG compliance. But you don’t have to wait for that to happen as several banks, insurance companies, and mutual funds already have ESG funds that you can invest in.

Personal finance is personal

There’s no “one-size-fits-all” investment strategy. Where we choose to invest and how we design our portfolio will depend on many factors, but most importantly, on our financial goals. The Chairman and CEO of the Personal Finance Advisers Philippines, Efren Cruz, has this reminder:

Investing is a tool. You need to determine first your goals for investing and quantify those in terms of their future cost. Then compare that to the money that you can invest as well as what you can periodically add to derive the needed investment return as tempered by your willingness to take risks. Then find an investment that corresponds to what you arrived at.

Moreover, it’s also a good idea to diversify and put your money in several places. I asked financial planner and economist, Dr. Alvin Ang where he would invest in 2022 if he had P10k, P100k, and P1 million. This is what he said:

If I have P10k, I will put it in a quasi-liquid asset such as retail treasury bond. For P100k, I’ll divide it into 4 parts: RTB, blue-chip stocks, balanced fund (UITF/mutual), corporate bonds.

For P1 million, I will divide it into 5 parts: RTB, blue-chip stocks, balanced fund (UITF/mutual), corporate bonds, and aggressive stocks. It’s also good to invest in a logistics business.

So where should you invest in 2022? It’s only you who can answer that. But I hope that I’ve given you ideas of where to start looking and what to first consider.

Note: Interviews were done in January 2022, before the Russia-Ukraine crisis. Moreover, this article also appears in MoneySense Magazine Philippines.

What to do next: Click here to start your financial journey with IMG Wealth Academy

One comment

  1. Excellent ideas for 2022. While no one wants to ” catch a falling knife,” the Russia-Ukraine conflict may provide some excellent entry points. Every crisis will pass, just a matter of time. Stick with your investment plan and the reward will come.

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