After a markedly rocky economic outlook that seemed ever present in 2022, many of us are looking forward to smoother sailing as 2023 gets underway.
The previous year was marked by a deluge of troubling news in the markets, with equities and stocks experiencing a sharp downturn. This was even true of blue chip tech stocks, with both the tech-heavy NASDAQ and the S&P 500 Technology sector both down between 28-30% towards the end of the year.
Other sectors of the economy expierenced sharp contractions. Not least of all the cryptocurrency sector which — aided by a number of industry scandals such as the fallout from the collapse of FTX — tumbled in value over the course of the year.
The macroeconomic outlook was similarly gloomy. In addition to the Federal Reserve and other central banks across the world ratcheting up interest rates, billions of individuals around the world are experiencing sharp inflationary pressures caused by stagnating wages, rising costs and spiraling energy prices. This has led to the GDP growth of many of the world’s major economies crawling to a halt as they tried to stave off recession for another quarter.
But putting aside the question of what is GDP for a minute, despite these factors combining to make 2022 a rocky time for investors, the outlook is not necessarily quite so gloomy as we move forward into 2023. In fact, although many sectors of the economy will likely continue to struggle in the new year, for the savvy investor there are still plenty of solid investment opportunities to take advantage of.
But what are these investment opportunities, and which should you take advantage of right now?
Although many of the world’s major economies are on the verge of recession moving into 2023, this is far from a global trend. In fact, despite the inflationary and recessionary pressures present in the UK, major spending continues on infrastructure projects around the world.
In recent years, both the US and the UK governments have approved numerous large-scale building and construction projects, with many other European countries also following suit. These projects are particularly important as countries around the world try to transition to a low carbon future.
According to one industry report, the global infrastructure market might reach $3,267bn by 2027. As an individual investor, you can take advantage of this trend by investing in index funds that focus on infrastructure companies.
Given that pretty much all societies around the world are becoming increasingly digital, it is perhaps little surprise that the global cybersecurity market has surged in size over the last few years. By all accounts, this trend looks set to continue into 2023.
A recent survey by the global consulting firm McKinsey & Company has identified a $2tn investment opportunity for cybersecurity technology service providers, as demand continues to grow across all sectors of the economy.
Cyberattacks are proliferating at a rapid rate. Given the massive fees that can be levied against companies for data breaches, these can turn into a significant financial burden if sufficient protection is not put in place.
Given this, investing in cybersecurity focused companies could be a wise move for the savvy investor looking to follow market demands!
Another sector of the economy undergoing rapid growth is artificial intelligence.
Artificial intelligence (AI) is a high risk but growing sector of the market and will be a key industry moving forward. AI software will power everything from online banking and eCommerce, to web services such as Amazon’s Alexa.
AI has also been receiving considerable media attention lately as new developments like ChatGPT burst onto the scene.
It is clear that AI will continue to be in demand in the year to come, with the big tech companies such as Microsoft announcing significant levels of investment. An easy way to invest in this space is to check out diversified investment opportunities such as the Wisdom Tree Artificial Intelligence UCITS ETF.
Don’t forget to invest in yourself!
In addition to the many fine investment opportunities just set out, however, by far the most valuable investment you can make in 2023 is in yourself.
Whether it is learning a new set of skills that will help you to land that dream job, starting a side-hustle or cultivating your interests and relationships, making even small investments in these areas of your life can pay off dividends in the years and decades ahead.
In this way, you can use the same ideas about compounding interest from your personal finances to invest in your career, relationships, well-being and overall happiness. Small investments of time you make today will add up over time and can make profound changes in how you live your life.
So, we would recommend investing as much time and effort into yourself as you do into your investment portfolio going into 2023. Who knows, the skills you learn might just help you to strike it rich!