When investing, stocks get the lion’s share of the attention. Investing in individual stocks is one way to grow your wealth, but there are plenty of other investment assets to explore and understand.
Depending on your financial goals, timeline and risk tolerance, you should invest in a well-diversified combination of the following nine assets to build your portfolio.
Stocks are the basic building blocks of investing. When you buy stocks—frequently referred to as equities—you receive shares of ownership in a public company.
As the company grows and earns greater profits, the value of your shares of stock should appreciate. You may even be entitled to dividend payments as a shareholder.
Here are four ways to think about the different stocks available:
- Growth stocks. These are companies that are growing their revenues, cash flow and earnings at rates that are much greater than their peers.
- Value stocks. Very often, the share prices of perfectly solid and healthy public companies drop well below where they should be, due to larger market developments outside of the company’s control. When a stock’s price is low like this but its business fundamentals are good, it’s called a value stock.
- Dividend stocks. Companies that pay dependable dividends are viewed as providing shareholder a steady stream of income.
- Blue-chip stocks. These are the stocks of large, established public companies that have become household names, like Apple, Disney and Microsoft. Blue-chip stocks have a proven track record of dependable performance and a history of regular dividend payments.
To buy stocks, you need an account. You can opt for a tax-advantaged account such as an individual retirement account (IRA), or a taxable brokerage account.
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Bonds are fixed-income securities that corporations and governments issue to raise money to fund projects. When you buy a bond, you lend money to the issuer. In exchange, the bond issuer pays you interest and, once the bond reaches its maturity date, the issuer returns your original investment.
Bonds are less risky than stocks, but they also offer lower returns. If interest rates rise, bonds become less valuable because new bonds offer higher rates.
To buy bonds, you can purchase them directly from an issuer, or you can buy them through a brokerage account.
When financial professionals refer to cash as an investment, they’re not talking about literal bills and coins. Instead, cash investments—commonly called cash equivalents—are short-term investments that provide stability to your investment portfolio.
Common examples of cash investments include the following:
- Money market funds. These mutual funds invest in government bonds, tax-exempt municipal bonds and corporate or bank debt securities.
- Treasury bills. Known as T-bills, these are short-term investments issued by the U.S. government with maturities ranging from four to 52 weeks.
- Certificates of deposits (CDs). CDs are deposit accounts that usually offer higher rates than savings accounts. CDs have terms ranging from a few months to several years, and the money cannot be touched before the end of the CD term without incurring significant penalties.
Cash equivalents are useful if you have short-term financial goals and will need the money within a few months. They are also appealing to retired investors that can’t afford to take on much risk.
You can invest in cash equivalents through banks or TreasuryDirect.gov. Some brokerage firms also offer brokered CD accounts.
4. Mutual Funds
A mutual fund pools money from investors to invest in groups of stocks, bonds and other securities. Its combined holdings, known as a portfolio, are managed by experienced financial professionals.
There are several types of mutual funds:
- Stock mutual funds. A stock mutual fund is a collection of stocks chosen by a professional money manager. The fund is typically designed to track a market index, such as the S&P 500.
- Bond mutual funds. Bond mutual funds invest solely in bonds rather than stocks. These funds provide stability to an investment portfolio and typically have lower returns than stock mutual funds.
- Balanced funds. These mutual funds own a mix of both stocks and bonds, typically with a fixed asset allocation such as 60% stocks and 40% bonds.
Compared with individual stocks, mutual funds are lower-risk investment assets. By investing in a mutual fund, you diversify your portfolio by owning many stocks or other securities at once.
There are thousands of mutual funds, but we’ve identified the best mutual funds to help you get started. If you’re ready to invest your money, you can buy mutual funds through your brokerage account.
5. Index Funds
Index funds are a form of mutual fund that’s passively managed and best suited for long-term investors.
While many mutual funds are actively managed by professionals who try to beat the performance of a market benchmark, index funds aim to replicate the performance of market indexes, such as the Dow Jones Industrial Average (DJIA) or the S&P 500.
Like standard mutual funds, index funds provide diversification since you invest in many companies or industries at one time. If one company within the fund performs poorly, the other companies within the portfolio may offset the losses.
You can buy index funds through your employer-sponsored retirement plan or your brokerage account.
6. Exchange Traded Funds (ETFs)
Like mutual funds, ETFs pool money from investors to buy baskets of securities, including stocks and bonds. ETFs can track market indices or they can be focused on particular sectors, such as foreign energy companies or domestic technology securities.
ETFs tend to have lower investment minimums than mutual funds, so they’re a good choice for new investors without a lot of cash on hand. Like stocks, they are bought and sold on market exchanges throughout the day.
You can buy ETFs through brokerage accounts and employer-sponsored retirement plans. If you are new to investing, our guide to the best ETFs could be a good starting point for you.
An annuity is a contract between an individual and an insurance company. When you purchase an annuity, you pay the insurance company in installments or a lump sum.
In exchange, the insurance company agrees to make periodic payments to you for a set period. Many people typically use annuities to get a steady stream of income in retirement.
There are three main types of annuities:
- Fixed annuities. A fixed annuity pays a guaranteed interest rate for a preset period. Once the accumulation phase is complete, you will receive payments for a set period, such as 10 to 20 years.
- Variable annuities. A variable annuity does not have a guaranteed interest rate. The interest rate and payments will fluctuate based on the performance of the underlying investments, such as stocks and bonds.
- Index annuities. With an index annuity, interest and payments are determined by the performance of a stock market index, such as the Nasdaq Composite.
You can invest in annuities by working with an insurance company, bank or investment broker.
Derivatives are financial instruments whose values are based on an underlying asset. The three most common types of derivatives are futures, options and swaps.
- Futures contracts. Futures contracts are agreements to buy or sell an asset at a future date and price. For example, you may agree to buy gold at $1,000 per ounce six months from now. If the price of gold goes up to $1,200 per ounce, you will profit from the difference. However, if the price falls to $800 per ounce, you will incur a loss.
- Options contracts. These contracts are much like futures, but buyers have the right—but not the obligation—to buy or sell an asset at a future date and price. Call options give you the right to buy an asset, while put options give you the right to sell an asset.
- Swaps. These are agreements between two parties to exchange cash flows in the future. For example, one party may agree to pay another party a fixed interest rate in exchange for a variable interest rate.
Derivatives can be used to speculate on future price movements or to hedge against losses. However, they tend to be complex, risky investment assets, so they may not be a good idea for the average retail investor.
As an investment asset, cryptocurrency has received a lot of buzz. The most well-known cryptocurrency is Bitcoin (BTC), but there are many others. Top cryptocurrencies include Ethereum (ETH) and XRP (XRP)
Investing in cryptocurrencies is risky, as their prices can be highly volatile. These assets are also not regulated like other investment assets, like stocks and bonds. But that may change as governments take a wider interest in applying more regulations to the sector.
Zacks Investment Ideas feature highlights: Alphabet, Tesla, Shopify, Amazon and Palo Alto
For Immediate Release
Chicago, IL – February 2, 2023 – Today, Zacks Investment Ideas feature highlights Alphabet GOOGL, Tesla TSLA, Shopify SHOP, Amazon AMZN and Palo Alto Networks PANW.
Which of These Stocks Has Been the Best Buy, Post-Split?
Stock splits have been a regular occurrence in the market over the last several years, with many companies aiming to boost liquidity within shares and knock down barriers for potential investors.
Of course, it’s important to remember that a split doesn’t directly impact a company’s financial standing or performance.
In 2022, several companies performed splits, including Alphabet, Tesla, Shopify, Amazon and Palo Alto Networks. Below is a chart illustrating the performance of all five stocks over the last year, with the S&P 500 blended in as a benchmark.
As we can see, PANW shares have been the best performers over the last year, the only to outperform the general market.
However, which has turned in a better performance post-split? Let’s take a closer look.
We’re all familiar with Tesla, which has revolutionized the EV (electric vehicle) industry. It’s been one of the best-performing stocks over the last decade, quickly becoming a favorite among investors.
Earlier in June of 2022, the mega-popular EV manufacturer announced that its board approved a three-for-one stock split; shares began trading on a split-adjusted basis on August 25th, 2022.
Since the split, Tesla shares have lost roughly 40% in value, widely underperforming relative to the S&P 500.
Palo Alto Networks
Palo Alto Networks offers network security solutions to enterprises, service providers, and government entities worldwide.
PANW’s three-for-one stock split in mid-September seemingly flew under the radar. The company’s shares started trading on a split-adjusted basis on September 14th, 2022.
Following the split, PANW shares have struggled to gain traction, down roughly 15% compared to the S&P 500’s 3.3% gain.
Shopify provides a multi-tenant, cloud-based, multi-channel e-commerce platform for small and medium-sized businesses.
SHOP shares started trading on a split-adjusted basis on June 29th, 2022; the company performed a 10-for-1 split.
Impressively, Shopify shares have soared for a 50% gain since the split, crushing the general market’s performance.
Alphabet has evolved from primarily being a search engine into a company with operations in cloud computing, ad-based video and music streaming, autonomous vehicles, and more.
Last February, the tech titan announced a 20-for-1 split, and investors cheered on the news – GOOGL shares climbed 7% the day following the announcement. Shares started trading on a split-adjusted basis on July 18th, 2022.
Alphabet shares have sailed through challenging waters since the split, down 10% and lagging behind the S&P 500.
Amazon has evolved into an e-commerce giant with global operations. The company also enjoys a dominant position within the cloud computing space with its Amazon Web Services (AWS) operations.
AMZN’s 20-for-1 split was a bit of a surprise, as it was the company’s first split since 1999. Shares started trading on a split-adjusted basis on June 6th, 2022.
Following the split, Amazon shares have lost roughly 18% in value, well off the general market’s performance.
Stock splits are typically exciting announcements that investors can receive, with companies aiming to boost liquidity within shares.
Interestingly enough, only Shopify shares reside in the green post-split of the five listed.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
$13 million investment in Campbellford Memorial Hospital
The Campbellford Memorial Hospital will be receiving a $13 million investment from the Ontario Government to address infrastructure concerns.
The announcement was made at the hospital by Northumberland—Peterborough South MPP David Piccini.
The $13 million is broken down as follows:
- $9,639,900 will be going to CMH as one-time capital funding to address the HVAC and generator
- $1,874,929 for reimbursement of CMH’s COVID-19-related capital expenses
- $771,797 in COVID-19 incremental operating funding
- up to $600,000 in one-time funding to support the hospital’s in-year financial and operating pressures
- $163,600 in pandemic prevention and containment funding
- $81,132 through the Health Infrastructure Renewal Fund
- $46,884 in health human resources funding.
Interim President and CEO Eric Hanna welcomed the news, saying much needs to be done about the HVAC and generator.
At the announcement, Hanna spoke of the issues with the generator.
“I’ve got the wee little generator up at the lake and then I’m thinking well, everything should be going well at the hospital,” Hanna told the audience in attendance.
“You get a call from the person in charge who says, ‘Guess what Eric? Generator didn’t start. Oh, so what does that mean? There’s no power in the hospital.’ That’s happened a couple of times in the past year and the generator is over 30 years old.”
Hanna says the solution was not as easy as replacing the generator.
“You can go buy the generator and that may be about a million dollars. But then when we found out afterwards, we came to hook up the new generator to the electrical distribution system and said it won’t work with that because your electrical distribution system is 1956. You can’t plug this generator into that. So now we’re putting close to $5 million into a whole electrical distribution system so the generator will work. It’s part of that ongoing thing and that’s why these costs continue to go up.”
The HVAC system was also something addressed by Hanna.
“It’s a contract close to $7 million to replace that. This wing, for example. There’s no fresh air in this wing. It hasn’t worked in here for 15 years. So now this is administrative areas and the concern was that in some of the patient carriers, it wasn’t working either. So – having those discussions with David (Piccini) and saying what we have to do to correct this.”
Chile’s Enap Set to Slash Debt Burden That Weighed on Investment
(Bloomberg) — Enap, Chile’s state oil and gas company, plans to use near-record earnings to slash its debt burden, while increasing investment in its refineries and in exploration and production.
The company aims to reduce its debt load to about $3 billion “medium term” from the current $4.3 billion, Chief Executive Officer Julio Friedmann said in an interview. Plans include a bond sale in the first half of this year to refinance some securities.
The improved financial position — with 2022 profit surging to $575 million — comes after Enap’s oil and gas operations in Egypt, Ecuador and Argentina got a boost from high crude prices, while healthy international refining margins benefited plants in Chile. Those trends are expected to extend into this year and next, enabling the company to pre-pay some short-term obligations. About half of the current debt burden matures in the next three years.
“We are going to issue bonds,” the MIT-trained executive said Wednesday from the Aconcagua refinery in central Chile. “We are closely evaluating the local and international markets.”
At the same time, Friedmann, who took the reins at Enap in November, plans to increase capital expenditure to about $700 million this year from $550 million last year.
The increase comes after underinvestment in the past few years because of Covid restrictions and the heavy debt load. Spending will focus on making treatment processes cleaner and upgrading infrastructure, as well as a more aggressive approach to increasing gas reserves in the far south of the country, he said.
Enap plans to expand in both liquefied petroleum gas and natural gas markets in Chile, focusing on the wholesale business and eventually selling directly to large-scale consumers such as mines. Organizational changes to enable the expansion will be announced soon. There are no plans to enter the final distribution business, Friedmann said. The company wants to supply more gas to southern cities as a way of replacing dirtier fuels such as wood and diesel.
Enap and its partners are also preparing pipelines and a refinery near Concepcion to start receiving crude from Argentina’s Neuquen basin sometime this year in an arrangement that could supply as much as 30% of its needs.
While there’s plenty of potential do collaborate more with energy-rich Argentina, particularly in the Magallanes area, that would require greater long-term visibility on supplies from the neighboring country, Friedmann said.
He sees a role for Enap in the development of green hydrogen in Chile. It’s in talks with three companies to enable its facilities in Magallanes to be used to receive all the wind turbines, electrolyzers and other equipment that will be needed to make the clean fuel. Enap is also evaluating its own small pilot plants and will consider whether to take up options to enter other green hydrogen projects as an equity partner.
While the company will maintain its focus on meeting rising demand for traditional fuels, it anticipates new regulation that will require lower emissions. It’s also looking closely at clean-fuel options for aviation, Friedmann said.
(Adds clean fuel plans in last paragraph. I previous version corrected spelling of CEO’s surname.)
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