If the post-pandemic age has been defined by anything, it has to be the massive surge in activity across the financial markets. The numbers of ordinary people getting into trading and investing over the past two years have been absolutely unprecedented. In fact, it is now estimated that retail actors currently account for up to 25% of the total stock market, and these figures are even higher in developing markets.
After hitting new all-time highs at the tail end of 2021, cryptocurrencies are another asset class that has enjoyed record capital inflows and newfound popularity among institutional and retail investors alike. And it's easy to see why more and more men and women in the street are shunning the banks and opting for higher risk-to-reward options.
Between near double-digit inflation and paltry savings account rates, the huge gains posted in the stock and crypto markets of late have been enough to tempt even the most conservative of savers. In this article, we'll look at what is driving the hype on the financial markets and how you can maximise your potential returns as a trader or investor.
The hidden tax
Sound financial planning and saving money have traditionally gone hand in hand, but the era of ultra-low interest rates had already begun to challenge that paradigm. Then, as super-inflation started to take hold, long-term cash savings became nothing more than a surefire way to economic ruin. If your savings account is paying you 2% APY on deposits, but prices are rising by 8% a year, it doesn't take a rocket scientist to work out that you're actually losing 6% of your wealth each year.
Contrast this with the amazing returns seen in the stock market over the past 12 months, and it becomes a no-brainer. Even conservative plays like Tesla (TSLA) or Alphabet Inc (GOOGL) would have netted you 65% and 38.5%, respectively.
Certainly, many of the new entrants to the stock market were perhaps reluctant at first, but now they're confidently purchasing ETFs, indices and even individual stocks. Until inflation is brought under control — which could be many months (or even years) and multiple rate hikes from now — securities investments will be an absolute necessity for anyone below retirement age.
The digital revolution
Crypto has been one of the most hotly discussed asset classes of the past 24 months, making headlines in 2021 for its explosive growth, newly discovered utility and widespread adoption. The movements in this higher-risk market have been even more spectacular in their swings than stocks but come with much more uncertainty. For instance, while BTC was up over 90% at one point this year, it is currently down almost 40% from this recent all-time high.
However, with institutional investors now 'all-in' on crypto as an instrument class with staying power, it does appear as though these relatively young digital assets still have several growth cycles ahead of them.
Despite their characteristic volatility, they are still touted as potential inflation hedges, and an increasing number of people are thus including portfolio allocations of Bitcoin on a par with gold, for instance. There are still many fraudsters and scam artists operating in this space, and it is wise to take the time to find a reputable broker like Libertex, with a secure and user-friendly app that allows you to store your crypto holdings alongside the rest of your stocks, currencies and commodities.
With the rising popularity of trading and investing, the market has become quite saturated with companies offering financial services. Unfortunately, not all are made equal, and your choice of broker will have a significant impact on overall performance. Libertex, for example, offers commission-free crypto CFD trading, which means all you pay is the spread when buying or selling digital currencies. Most operators in this space charge transaction, exchange and commission fees on every single purchase or sale, reducing your potential returns by a significant margin.
And, if like many new crypto investors, you are predominantly a holder of equities or other more traditional assets, you might prefer having the option to store your entire portfolio in one easy-to-access location for added comfort and convenience. Luckily, Libertex has been connecting ordinary people with a range of financial markets for nearly a quarter-century and can give you access to all your holdings via its intuitive, multi-award-winning app.
Don't put all your eggs in one basket
As exciting as short-term trading may well be, some people reasonably prefer long-term investing. Well, now the company's new Libertex Invest account type enables you to make long-term stock purchases completely free of charge. That is to say, you won't be charged any transaction fees, commission or other costs. This means you can buy and hold individual stocks like Microsoft or Apple or even indices like the S&P 500 or Nasdaq under the most attractive terms. Even if you're a die-hard trader at heart, you have to admit, it's always good to have a lower-risk nest egg stashed away for a rainy day.
With this in mind, the brand-new Libertex Invest product now allows you to keep your active trading and passive investment portfolios conveniently separate, all the while providing you with fair conditions for both account types. So, if you are about to dive into one or both crypto CFD and investment worlds, trying Libertex and opening your very own dedicated account would be a rather wise choice!