Where to get bang for your buck: Five investments to thrive in 2018

INCREASED volatility is expected for financial markets in 2018 but that doesn’t mean there won’t be good investment opportunities. Here are some of the experts’ top picks.

PROPERTY is under pressure, shares are set to take a breather, and investment returns from cash in the bank are as bad as ever.

So where do you put your money in 2018 to generate some decent investment returns.

While nothing’s guaranteed in the world of finance, and good news stories can quickly turn sour, investment specialists are forecasting some sectors of strength this year.

Here are five investments most likely to thrive.

1 EUROPEAN SHARES

International shares surged in value in 2017 and are tipped to again do better than Aussie shares this year, although not in all regions.

AMP Capital forecasts international sharemarket returns to be 11 per cent in 2018.

“Global shares are due a decent correction and are likely to see more volatility but they are likely to trend higher and we favour Europe — which remains very cheap — and Japan,” AMP Capital head of investment strategy Shane Oliver said.

Some of last year’s top investment performers are expected to do well again this year.

Morgan Stanley Wealth Management said 2018 was Europe’s “time to shine”, boosted by solid EU growth and investors seeking value for money.

A popular way to buy global shares is through exchange traded funds, which are listed on the ASX and spread investors’ money across a wide range of international companies.

2 US SHARES

The US sharemarket continually broke records in 2017 and while there are expectations of a correction at some point, more strength is likely this year.

MONEY: Eight ways to get ahead in 2018

Wealth for Life Financial Planning principal Rex Whitford said many people underestimated the potential power of President Trump’s income tax cuts and sweeteners to lure US companies back home.

“That is going to have a massive economic stimulus in the United States,” he said.

However, some analysts say this might spark interest rate rises in the US that could hurt share prices.

3 REGIONAL REAL ESTATE

Capital city housing markets are under pressure, with prices falling last month in four cities — including Sydney and Melbourne — while Brisbane was flat, according to CoreLogic.

Property investment experts say regional centres offer growth potential but you should choose carefully.

Wealth For Life Financial Planning’s Rex Whitford thinks US shares will do well.

Binnari Property managing director David Hancock likes Queensland’s Sunshine Coast, especially towns such as Caloundra and Coolum.

“A lot of infrastructure spending taking place is transforming the local job market, moving away from holiday-retiree only market,” he said.

Suburbanite principal Anna Porter said Goulburn was the place to invest in New South Wales, while in Victoria Frankston and Geelong still had growth potential, and Tasmania’s booming housing market still offered good rental income yields.

“We still have eyes on Adelaide. It’s a fantastic opportunity for investors at the moment … but you don’t want to be buying units,” she said.

4 INFRASTRUCTURE

Infrastructure investments such as airports, toll roads and pipelines have been strong performers for a few years and look like doing well again.

Their high income payments are popular because interest rates are low.

AMP Capital has forecast unlisted infrastructure investments to rise 10 per cent in 2018.

RARE Infrastructure — which runs several funds in Australia and offshore — says emerging markets look promising. “The bulk of global infrastructure new spending will occur in emerging markets,” said RARE Infrastructure portfolio manager Charles Hamieh.

5 RESOURCES

Global economic growth is forecast to improve in 2018, which is good for mining and energy companies, and BHP Billiton is among stockbrokers’ favourites.

Mr Whitford said a flow-on effect of a strong US economy would be rising demand for products from China, which would increase its demand for Australian resources. “I think resources in Australia are going to do well this year,” he said.

@keanemoney

Originally published as Where to get bang for your buck: Five investments to thrive in 2018