Debt • Finances & Money • Investing

5 Smart Investments for 2010

By Mark Brown

The last several years have left many investors in dire need of an investment comeback. While the last quarter of 2009 found the market crawling out from the depths into which it had dropped, much is still left to be desired when it comes to replacing many investors’ losses. Like the home team in the last quarter of the championship, many of our portfolios are still down by a couple scores and need a few big plays to get us back in the game.

While 2010 isn’t making any promises be the big playmaker we’re all searching for, some investments out there could at least help make the year profitable.

1) Mutual Funds/Retirement Accounts

There are bound to be a few bumps in the road ahead when it comes to the stock market, however; let us hope that the worst is behind us – at least for a while. Economies around the world appear to be on the slow road to recovery, which means that stocks might continue to climb throughout the year. Until inflation starts to smother the US economy, people will be searching for someone to store their dollars. With banks offering pittances for interest rates on savings accounts and CDs, treasuries offering nothing in the way of enticement, and many mattresses already full, look for investors to continue to dump money into stocks, retirement accounts, and mutual funds, pushing the markets as a whole higher this year.

2) Debt

Before you go dashing out to invest in stocks, bonds, commodities, or currencies, consider your personal finances. When you put money into most investments, you take your best guess at establishing calculated risk on the well-being of your money. However, when paying off debt, you know exactly what your money will be making you – or should I say, saving you.

Sometimes we get so caught up in the talking heads telling us to prepared for the future, save for retirement, invest, invest, invest, that we can’t see the forest for the trees. Putting your hard-earned cash into a mutual fund that might return five or six percent while you make credit card payments at 18% interest is in most cases a decidedly a poor investment choice. Whether it is credit card debt, student loans, a mortgage or car loan, consider taking a good hard look at whether you have the money to spare for investments or should instead be paying off debt.

3) Oil

While oil has been on the comeback trail lately, it’s nowhere near its summer 2008 highs. With economic recoveries seemingly starting to take hold around the world, albeit slowly, look for oil prices to continue to rise as well. By the summer of 2010, we could easily see oil well over $100 a barrel and possibly quite a bit higher. Whether you’re looking to get into the commodities market directly or invest in oil stocks, profits could be there for the taking in 2010.

4) U.S. Government Series I Savings Bonds

Series I US government bonds are inflation protected savings devices. The only time they don’t provide a guaranteed return (which is still better than a loss in my opinion), is during periods of deflation. Otherwise, the bond is based upon a combination of a fixed rate at the time of purchase, and inflation based upon the CPI-U index (Consumer Price Index for all Urban Consumers). The maximum investment per calendar year for I bonds is $5000, but as an alternative, consider investing in TIPS (Treasury Inflation Protected Securities) which can be obtained through most brokers. With plenty of cheap cash streaming into the economy, I’m looking for inflation to start taking off at the end of 2010, and I’ll be ready for these bonds to do the same.

5) A Home

As a first time or even established homebuyer, 2010 can be the perfect time to grab some real estate. President Obama’s extension of the first time homebuyer tax credit as well as the initiation of the existing homeowner’s tax credit means that buying homes, which may already have hit rock bottom prices, could be a great investment. Of course you likely won’t see your investment take off like it would have three years ago when home prices were appreciating at ridiculously high rates. Nevertheless, if you’re investing for the long haul, understand the investment you are making, and the costs involved with owning a home, real estate could be the way to go in 2010. (CD NOTE: Your personal residence is an investment because it’s not a liquid asset like a rental property.)

Mark Brown, a writer from NSW, writes about personal finance for an Australian comparison website offering easy credit cards comparison among a wide range of products including many popular gold credit cards that offer additional services and rewards. Go to creditcardcompare.com.au to get a better deal on you card today.