Few people will deny that the country has gone through a significant upheaval over the last few months. Moreover, the turmoil does not appear to be ending anytime soon. As an investor, you may be trying to make heads or tails out of these changes. The effort here is to determine how to invest your funds for maximum profitability. On the one hand, the stock market has performed incredibly well within the last few months. Many investors are reaping the rewards of being heavily invested in stocks at the right time. On the other hand, there is considerable uncertainty and downright concern among many people about where the country is headed. With this in mind, you may be trying to analyze the biggest investment challenges for the coming year.
What Investment Challenges Does 2017 Face?
There are many factors that impact different investment types as well as various sectors of the economy. These various factors create considerable challenge for you as an investor. Take a closer look at some of the many investment challenges that this year holds. Then you will be able to make more educated financial decisions about your personal investments.
Understanding How Healthcare and Pharmaceutical Stocks Will Perform
Reforming healthcare seems to be at the top of the new president’s to-do list. However, the new administration has not yet crafted a reasonable solution to alter Obamacare. More than that, the new administration’s budget aims to cut funding for Medicare and Social Security payments in the future.
These are all factors that could play a major role in healthcare and pharmaceutical stocks. They could have trickling effects through other areas of the economy. After all, cutting back on Medicare could result in many elderly individuals not being able to afford long-term care in a nursing home.
This could alter the home structure in houses across the country. It could even impact your ability to invest personal funds in new areas. There seems to be no end to the healthcare debate at the moment. Therefore, this may be one of the investment challenges that will persist for the time being.
Determining How Personal Tax Changes Will Affect Your Portfolio
Another factor to consider when you are trying to determine how to invest your funds relates to your personal taxes. The new presidential administration has announced innovative taxation plans. They may increase personal property taxes for lower wage earners. They may also reduce taxation for wealthy individuals.
Depending on where you fall on this spectrum, you may need to reallocate your funds appropriately. Let’s say your taxes are higher in the coming year. Then you may need to hold back some of your investment funds so that you can pay your higher tax bill.
Deciding How Much to Invest Versus Save for a Rainy Day
In 2017, there is a considerable amount of political uncertainty. This is particularly true with North Korea, Russia, China and other countries. There is also an ongoing battle against terrorism with ISIS and other groups. That threatens our security at home and abroad and draws military personnel overseas.
These factors create some uncertainty that may spur the desire to save more money for a rainy day. When you allocate more funds toward savings, you will have less money available to invest. Determining how much money you should save versus invest is one of the top investment challenges for this year. Remaining more liquid may help you to navigate through unfortunate events that may happen in the near future.
Understanding Risk in the Financial Sector
The financial sector of the economy was a major cause of economic turmoil that led to the last recession. The federal government created regulations at that time to prevent such a crisis from happening again. However, the new administration has stated that it plans to repeal some of these regulations. This may once again create economic uncertainty and even instability in this sector of the economy.
Analyzing How to Invest in Defense
Defense is one area of the federal budget that one does not expect to be scaled back in the coming years. In fact, one can anticipate more spending in this area as the new president cracks down on terrorism and takes a hard stance against North Korea. Investing in defense may be a wise move for investors to make in the coming months and years.
Understanding How the International Markets Will Be Impacted
Other investment challenges relate to international markets and how these will be affected by political changes that are taking place. Trade, foreign aid, sentiment for or against U.S. products and more are all factors that could play a role in the economy and that could affect your overall investment decisions. Because so many factors are at play in this area, it can be difficult for the average investor to determine how this will shake out.
Estimating the Impact of Energy Regulation Changes
Up until recently, investing in green energy was a top option for investors to consider. There was a growing determination to decrease dependence on fossil fuels and to use renewable energy sources, such as green energy.
However, the new president has stated support for America’s coal industry and other fossil fuels. He has stated an interest in eliminating some environmental control measures. Eliminating some of these measures may boost some companies from a financial perspective. However, it can make it difficult to determine if individuals should continue to invest in green energy companies.
Determining If Labor Will Be an Issue
Many industries rely on undocumented workers as part of their labor force. This includes construction, hospitality, agriculture and more. The tightening of immigration laws and policies has resulted in many of these workers being sent back to their home country. As this policy continues, it could potentially affect how companies conduct business and the cost of their goods or services. One of the investment challenges for 2017 relates to determining how labor issues will affect numerous sectors of the economy.
Deciding If Safer Investments Are a Smart idea
As you can see, there are many facets of the economy that are in turmoil right now. Making sound investments requires an investor to analyze the market, including supply, demand, labor, taxation and more. With so many of these factors up in the air, some investors are wondering if they should pull out of stocks, real estate, and other investments and if they should purchase safer CDs or bonds. However, with speculation about rising interest rates, even an investment in a long-term bond may not be a wise idea.
Each year brings new investment challenges that investors must analyze and mitigate if they want to maximize their return. This year seems particularly problematic because of how significant the political changes are throughout many sectors of the economy. It may be wise for investors to learn as much as they can about these various sectors and to pay attention to developing news stories related to them. By doing so, you can overcome many of these challenges and make savvy investment decisions.