Wall Street professionals say investors looking to maximize returns without taking on excessive risk have several options next year. Market strategists expect stocks to move higher in 2025, but expect it to be a tumultuous year, according to a CNBC Market Strategist Survey released on Dec. 13. point. Meanwhile, bonds are entering the new year with higher yields. Schwab recently said he expected fixed income to have a bumpy year but saw opportunities to lock in returns. So where are the best opportunities to invest $50,000 and take some risk? CNBC Pro spoke to strategists and investment advisors to get their advice. Be Selective on Technology Stocks, Lock in Bond Yields In this scenario, Anthony Saglimbene, chief market strategist at Ameriprise Financial, likes to employ a 60/40 portfolio and be selective in stocks. He noted that investors should focus on industry groups rather than industries. For example, while technology stocks will perform well in 2024, he will bypass the larger information technology industry and focus on software companies that have not kept pace with the leaders in artificial intelligence. He’s also bullish on financials in 2025, which should benefit from strong earnings growth and the potential for deregulation under the Trump administration. Within the industry, he will focus on companies related to capital markets. “If we have lower regulations, more (initial public offerings) and more mergers and acquisitions, then the profits of these investment banks will grow more than insurance companies or other financial companies that may be underperforming,” Sagrinbene said, adding that investments Investors should also take advantage of the attractive yields on high-quality government and corporate bonds now. “Lock in, extend the duration and take advantage of some of the income opportunities that still exist in fixed income,” advises Sagrinbene, who likes durations around five to seven years. For investors who want to reduce their bond allocations and not just increase their stocks, it makes sense to allocate 5% to 10% to alternative strategies or dividend stocks, he said. “If you want to take on more risk in stocks, I would do it in a smart way. Be selective, diversify, and add in an equity income strategy,” Sagrinbene said. “This will give you exposure to stocks but invest in a less volatile, less risky way and add some income to the portfolio.” Building a Stock ETF Portfolio James Humphries, founder and managing partner of Mindset Wealth Management It is recommended to build a portfolio of stock exchange traded funds to get the best returns with moderate risk. He is not affiliated with any of the ETFs mentioned above. His largest allocation is $20,000 into the Vanguard Growth ETF (VUG), which has an expense ratio of 0.04% and has returned about 37% so far this year. “It gives you exposure to the big companies in the U.S. domestic market like a traditional S&P 500, but with a growth bias,” Humphreys said, adding that over the past 10 years the index has outperformed S&P 500, but it doesn’t add much market risk. Humphries then put $10,000 into the Invesco QQQ Trust ETF, which tracks the Nasdaq 100 Index. He said this would allow investors to invest in the “big seven” technology growth stocks. The company’s expense ratio is 0.2%, which has risen about 29% year to date. QQQ YTD mountain Invesco QQQ Trust ETF Another $10,000 is dedicated to the artificial intelligence theme of the WisdomTree Artificial Intelligence and Innovation Fund (WTAI). The company’s expense ratio is 0.45%, which has risen more than 10% year to date. “This gives you access to people who are making decisions based on what they see and hear in the artificial intelligence space,” Humphreys said. To protect against expected tariffs imposed by the incoming administration, Humphreys will report to Vanguard Invest $5,000 in Small -Cap Growth ETF (VBK). The fund has an expense ratio of 0.07% and is up about 18% year to date. “If we get into some kind of tariff war, a trade war, typically domestic small caps are likely to be the beneficiaries,” Humphreys said. “Even a level trade playing field is generally good for small cap companies. ” His last $5,000 will be invested directly in the cryptocurrency space, especially since the new government seems to be crypto-friendly. Bitcoin is the popular choice, he said, although those who want to speculate can put $1,000 of that into Ethereum or other tokens. Humphreys will invest directly in crypto wallets. However, if new investors don’t want to hold it directly, they can access it through an ETF, he said. Focus on Dividend Growth Another way to earn good returns by taking on some risk is to invest in dividend-appreciation stocks, which have collectively lagged the S&P 500 and the S&P 500 this year, said Mitchell Goldberg, president of ClientFirst Strategy. Nasdaq Index. The Vanguard Dividend Appreciation ETF (VIG) has a year-to-date total return of 17.2%, compared with the S&P’s year-to-date total return of 26.6%. VIG YTD mountain Vanguard Dividend Appreciation ETF “Stocks that consistently raise their dividends year after year generally reflect growth in earnings and cash flow,” Goldberg says. “When a company is able to grow its dividend, it’s a sign of good company health.” Companies that pay large dividends but don’t grow them may be a sign that their profits and revenue are no longer growing. He said it could also happen because of a sharp drop in stock prices. Selling option For those who have $50,000 to put to work beyond immediate cash flow needs and retirement investments, Chuck Failla, a certified financial planner and founder of Sovereign Financial Group, recommends selling Covered Short Put. Options strategies involve selling out-of-the-money or at-the-money puts while leaving enough money to buy the stock. He explained that the seller earns put premium by agreeing to buy a specific stock symbol at a specific price within a specific time period. “The covered short put strategy is a way to lower the risk-reward ratio of the investment you want to make,” Failla said. “A covered short strategy only makes sense if you are willing to own the underlying investment.” He recommends that investors with a moderate risk appetite and a duration of at least five years hold a covered position in the SPDR S&P 500 ETF Trust (SPY) Short put option. For those who want to take on more risk, he would consider applying this strategy to the iShares Bitcoin Trust ETF (IBIT). Correction: Mitchell Goldberg is president of ClientFirst Strategy. An earlier version misstated the company’s name.
How to invest $50,000 in 2025 for maximum returns with low risk | Real Time Headlines
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