Bank interest rates remain low, Brexit and the general election have left the markets facing continued uncertainty and there are signs the housing market has slowed.
So where is the best place to invest your money and still get a decent return this year?
There are products and services out there that still allow you to make money. But sometimes it’s a case of thinking laterally and looking at investments you wouldn’t normally consider.
Here is a top ten breakdown of the investments that could make you money in 2018.
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1. High Return Investment Funds
High street bank interest rates in the UK remain pitifully low and although the Bank of England has recently increased interest rates, it’s not made any significant improvement to savings rates.
High return investment funds might be the answer.
You can often expect a much higher income on your fund investment – often 5% or more.
Some of the best-known ones boast annual yields of 6% to 7%. However, whilst annual income yield is good this sometimes comes at the expense of capital investment.
2. Investing in Stocks and Shares
Since the financial crash of 2008 more and more investors have turned to stable shares in blue chip companies. It means the cost of buying these shares for investors is higher and returns lower.
However, according to Bloomberg 16% of the FTSE350 index is paying 5% or more a year – it’s these stocks and shares you might look towards in 2018.
Investors need to consider the long-term stability of any companies they invest in because if profits start to fall, it will affect share prices.
For example, the Insight Equity Income Booster Fund has given investors an income of £5,463 on an initial investment of £10,000 over ten years. However, the capital amount has fallen to £7,560.
3. Fixed Rate Bond Investments
Fixed rate bonds can offer good returns in 2018 with rates as high as 8% on an investment of £5,000 in some corporate bonds. There are much more with rates of around 2%. However, this is still higher than most high street savings interest rates.
Although you have to tie your money up for a certain period of time in a fixed rate bond, it can offer you a much higher rate and protect you from any changes to the Bank of England base rate.
With a bond, if you can take your money out early you may lose any interest or have to pay a penalty. There are many different types of bonds available, and our guide can help make sense of the different types.
There are many different types of bonds available, and our guide can help make sense of the different types.
Compare the Top 10 UK Investment Bonds
4. UK Property Investment – a Buyers Market
The property market has taken a hit in 2017 with Nationwide reporting a 0.4% fall in the average home price in April and following a 0.3% drop in March. It means house price growth is down to 2.6% – its lowest in five years.
The largest house price drops were in London, and the largest increases were in the North West.
However, a property is still a traditionally safe place to invest both short-and long-term and grow your wealth.
If you opt for a buy-to-let investment you may have to pay additional stamp duty and changes to mortgage rate relief will affect your income.
You can expect rental yields of between 3% and 10% which is a far higher return than most ISAs.
And, depending on where you purchase the property, you can also expect capital growth of 15% or more over five years.
In addition, as prices experience a slowdown it’s a buyer’s market with an increased chance to grab a bargain.
5. Commercial Property Investment
Even with additional stamp duty and the phased abolition of mortgage interest rate relief, residential property is a good investment for 2018.
But more and more landlords are turning towards commercial property to invest their money.
Rental yields from shops and restaurants are generally higher and tenants often sign up for longer leases, meaning it’s a more stable and reliable source of income.
6. Investing in Fine Wine
Few equities have done as well as fine wine in recent years and as long as you can hold off drinking it you can expect a decent return.
For example, a 1982 Lafite Rothschild originally cost around £300 a case – in today’s money it is worth well in excess of £28,000.
Part of the appeal of wine is the limited supply – most exclusive winemakers produce very small batches.
Late, sharp frosts have reportedly devastated French wine production this year which could well push up prices on 2016 vintages.
Any wine that is produced in 2017 may be in short supply in years to come and could equally be worth more, as long as the quality is there.
Wine is now the best performing collectible investment, out performing classic cars and fine art.
Beware though – a lot of wine isn’t of a vintage worth investing in. You’ll need to carry out plenty of research so you’re not making an expensive mistake!
7. Buying a Classic Car
Classic cars are gaining more and more attention for their large returns.
According to the Knight Frank Luxury Index, classic car investments have enjoyed a return of over 300% over the last ten years.
Classic car investment funds are gaining ground as people view classic cars not just as collectables, but as tangible assets.
8. Emerging Markets Bonds
The risks of emerging markets, which have been high in the past, have come down at the same time as growth has slowed in developed markets.
Because they are emerging markets, bonds are often cheap but these same markets are currently showing high yields and strong growth.
The £1.7 billion Fidelity Emerging Markets Fund has enjoyed a return of around 49% over the last five years whilst JP Morgan’s Emerging Markets Income has returned 34% over three years.
9. Fine Art Wealth Management
If you’ve got money to spare, then investing in fine art could be a good market to consider if you don’t mind waiting for a return.
The UK currently has around 24% of the global art market share, according to the most recent European Fine Art Foundation (TEFAF) Art Market Report.
Investors can expect a return of around 4% over five to 10 years, but art should always be seen as a long-term investment.
However, unless it is the top end of the market and your focus is on pieces worth millions, then make sure the art you do buy is investment grade.
10. Diamond and Jewellery Investment
They say diamonds are a girl’s best friend but they can also be an investor’s friend too.
There are two ways to invest in them – buying rough, uncut or unpolished diamonds that appreciate in value or buying shares in a diamond mine.
However, these areas are a difficult market to break into despite a rise in internet brokerages. Because of this, investing in individual pieces of jewellery can still be a great alternative choice.
According to the Knight Frank Luxury Index, jewellery has seen its value rise by almost 140% over the last ten years.
There are plenty of auction houses offering pieces for sale but the internet has also made it much easier to invest in jewellery – both traditional names and newer designers.
It’s also a form of wearable art – you can enjoy a return on your investment as well as admire it on your wrist or neck!
Be Prepared for Risk
It is worth bearing in mind that these investments all contain elements of risk, usually higher than standard cash ISA or your bank account which is protected by the Financial Services Protection Scheme.
All investments can go down as well as up, and past performances are no guarantee of future returns.
Top 10 Luxury Investment Asset Performance (Updated Q4 2017)
|Luxury Asset||Price Growth (12 Mth)||Price Growth (10 Yr)|