People who spend their days studying investment options are optimistic about 2011. After all, 2010 ended on a positive note, from a return perspective, and this year is off to a solid start.
But the reality is that most investors still have portfolios filled with capital losses and fresh memories of the financial collapse, and they remain hesitant to take on risk.
Still, the professionals agreed that the risk to investors’ financial health this year could come as much from keeping their money in cash as from trying to do too much with it.
If the predictions hold true, this could be a good year for investors who choose wisely. But as everyone should be aware of by now, things do not always go as planned.
Most analysts said equities were poised for growth this year.
The reason for this is that many American companies are trading at relatively low price-to-earnings ratios, with estimates around 12 to 13 times earnings, when actual ratios are probably closer to 17 times. The companies also have large cash reserves that they will look to start spending.
For those who do not want to base everything on appreciation, look at dividend-paying stocks. Dividend-paying stocks could be a first step for investors moving out of bonds.
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