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Investing Trends and Projections for 2023

As we move further into 2023, many individuals seek greater clarity, confidence, and stability in their investments. Investors of all types are turning to passive investing opportunities — such as real estate opportunities or the stock market — as they navigate the financial landscape, from sprinters to marathoners and everyone in between, aiming to reach the finish line with as few missteps as possible. While unexpected obstacles may arise, profitability can be maximized through intentionality, exacting strategy, and calculated steps.

Instability causes a pivot to passive income

Stephen Davis, a prominent financial mentor and CEO of Total Wealth Academy, suggests that recent aversion to instability has led to a shift of “billions of dollars from the stock market to passive syndications.” He advises nimble investors to consider “syndications investing in income-producing real estate,” as these options can generate profit in both up and down markets. 

This sage advice is particularly valuable for investors seeking direction, whether beginner or advanced. Davis explores alternative avenues beyond the stock market, with the objective of preserving capital through market fluctuations while collecting returns.

The volatility within the stock market can be attributed to various factors, such as companies reevaluating their workforce plans, startup downsizing, sudden declines in property demand, and inflation-related interest rate hikes causing upheaval in the real estate market. Jamal English, CEO and Co-founder of EDM Lead Network, has experience as an investor in the insurance industry and is well-versed in taking long-term views amidst market turbulence. 

English suggests that, when investing passively, it’s essential to finance businesses led by visionary leaders with potential, creativity, and drive, which will enable investors to step back and reap the benefits. Reda Ahlouche, president and co-founder of EDM Lead Network, firmly agrees. “Positive signals for talented leaders lie in examining their actions and ability to deliver results and profits,” he says.

Additionally, investment decision-making is experiencing a significant shift with the increasing infusion of advanced artificial intelligence algorithms. Anip Patel, founder of CaPatel Investments, states, “The recent technological advancements in generative artificial intelligence, machine learning, and big data analytics enhance investment decision-making and make it easier for investors to manage their portfolios.”

Real estate investing and passive investing offer two distinct paths for investors fleeing the continuing turbulence of the stock market. Investing in real estate necessitates the purchase of properties that generate income through rent. In contrast, passive investing entails putting money into low-cost index funds or exchange-traded funds (ETFs) and letting the market do the work. According to Bankrate, an index fund is defined as “an investment fund that tracks a specific collection of assets…[including] stocks, bonds, and other commodities such as gold.” 

Prior to the pandemic, there was already an increasing acknowledgment of the scarcity in housing supply. However, the pandemic brought several industries to a grinding halt, and as society gradually returned to “normal,” the demand for building supplies and housing surged to unprecedented levels. 

Inflation has caused a dampening effect on the market upturn towards the end of the previous year and the first quarter of 2023, resulting in a decrease in prospecting buyers due to a significant increase in rates. However, Lazer Sternhell, CEO of Cignature Realty, whose expertise in real estate is paramount to predicting the winds of change, says, “signs point to an upswing for multifamily unit investing.” Sternhell recognizes the “inherent risk” in investing but encourages hesitant investors to weigh the evidence of “rising occupancy rates of rental units and the increasing costs of renting.” 

Investing in ingenuity  

Investors interested in a more passive approach to investing should act quickly ahead of 2023’s second quarter, as other experts predict a rise in the popularity of passive investing. This is particularly true for younger investors looking to build long-term wealth. 

The pursuit of diversification fosters innovation, as simply repeating historical investment patterns rarely leads to breakthroughs. As such, many industry leaders guiding others toward successful investments are taking a closer look at diverse representation and equality in the space. 

For example, serial entrepreneur and VC Diane Yoo notes that “96 percent of venture capital dollars are controlled by white VC partners.” Yoo’s pioneering work creates a pathway for women, diverse investors, and entrepreneurs. She is involved in various initiatives aimed at discovering untapped market opportunities in underrepresented communities. As a minority woman in the VC sector, Yoo is personally invested in this mission both figuratively and literally.

Likewise, Rotem Eylor, founder and CEO of Republic Floor, details that “the ingenuity of entrepreneurs within diverse industries is still untapped.” Eylor recommends investing in minority businesses “as an impactful way to affect multitudes of communities positively, discover fresh and cutting-edge ideas, and can help investors take a hands-off approach as they watch their income grow.” 

Typically, the younger generation is more focused on low fees and simplicity than on an active, hands-on managerial approach. Ari Rastegar, the founder of Rastegar Property Company, is an expert in procuring high-quality, recession-resilient, income-producing real estate for investors. Rastegar counsels individuals to “build real estate portfolios in fast-growing markets designed to reduce risks, such as multifamily, office buildings, warehouse space, and master-planned communities.” 

In regards to real estate investing, the concept of tiny homes has made the rounds in pop culture and media over the past several years. However, many investors exploring ways to diversify their portfolios while optimizing their ROI are missing this incredible real estate opportunity. 

Justin Draplin, CEO of ECLIPSE Cottages, directs investors to invest in “tiny homes within opportunity zones (OZs), which were created as part of the 2017 Tax Cuts and Jobs Act, to encourage capital investment in low-income areas.” Because tiny homes can be built using eco-friendly materials and energy-efficient features, investing in these structures within OZs comes with a slew of additional tax benefits. 

This opportunity, Draplin explains, “is a rare combination of social good, sustainable living, and profitability.” He highlights that investing in tiny homes within OZs “generate both tax-deductible interest and depreciation as well as a tax-free capital gain when you sell the property.”

In general, investors can anticipate an exhilarating year in 2023. Despite the possible risks, numerous prospects are available to those who conduct thorough research and remain ahead of the curve. Whether an individual selects real estate, passive funds, or alternative investments, comprehending the market and having a long-term investment plan is crucial.

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