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9 Investments Most Recommended by Financial Advisers

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While the COVID-19 pandemic seems to be waning, that doesn’t mean everything is returning to normal. So far this year, we’ve seen inflation surge, a bear market emerge and a recession loom.

For investors, the uncertain economic times pose a challenge. Do you stay the course? Switch up your investments? Or maybe pour all your cash into gold as all those TV commercials advise?

You’ll need to talk to a financial adviser to determine what option is right for you, but the 2022 Trends in Investing Survey offers insight into which investments financial pros are most likely to recommend. Conducted by the Journal of Financial Planning and the Financial Planning Association in February and March, the survey collected answers from more than 400 planners who offer investment advice.

Here are the investments they are most likely to recommend to clients.

1. Exchange-traded funds

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Financial advisers who use or recommend this investment with clients: 65%

Also known as ETFs, exchange-traded funds combine elements of stocks and mutual funds. They can be easily traded, like stocks, and offer the benefit of a diversified portfolio, like mutual funds. What’s more, they typically have low fees and don’t require a minimum investment, which makes them a popular investment vehicle.

2. Cash and equivalents (tie)

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Financial advisers who use or recommend this investment with clients: 52%

Cash is sometimes considered a safe way to store money since it’s immune from stock market crashes. The problem with cash is that inflation will eat away at its purchasing power. That’s why you want to invest at least some of your money elsewhere.

2. Non-wrap mutual funds (tie)

Mutual funds
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Financial advisers who use or recommend this investment with clients: 52%

Within a mutual fund, you’ll find shares of many different companies. That diversification makes mutual funds less risky than individual stocks.

Non-wrap mutual funds are those that anyone can purchase, and we’ll talk about more complex mutual fund wrap programs in just a moment.

4. Individual stocks

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Financial advisers who use or recommend this investment with clients: 38%

The idea of owning a piece of your favorite company can be enticing. But make no mistake: Individual stocks can be volatile, with prices fluctuating wildly depending on the news of the day. That may be why fewer than 4 in 10 financial planners advise buying them.

5. ESG funds

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Financial advisers who use or recommend this investment with clients: 34%

Environmental, social and governance (ESG) investments are favored by socially conscious individuals who want to keep their money in companies that share their beliefs.

Interest in ESG investments seems to be waning, though, with the 2022 Trends in Investing Survey finding only 31% of planners said clients had asked about ESG funds in the prior six months. That’s down from about 39% in 2021 and 2020.

6. Individual bonds

Series I U.S. government savings bonds
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Financial advisers who use or recommend this investment with clients: 33%

Just as you can buy individual stocks, you can buy individual bonds. While U.S. Treasury bonds may be best known, investors can also purchase municipal bonds, corporate bonds and other similar securities.

7. Mutual fund wrap programs

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Financial advisers who use or recommend this investment with clients: 27%

Typically offered by full-service brokerages, mutual fund wrap programs can provide access to advice and funds not otherwise available, with the costs “wrapped” into a single or fixed fee.

But beware of those fees. They can be higher than those for other investments, and the U.S. Securities and Exchange Commission issued an alert in 2021 about improvements that could be made in these funds’ disclosures.

8. Variable annuities

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Financial advisers who use or recommend this investment with clients: 26%

About one-quarter of financial planners use, or have advised their clients to purchase, a variable annuity. These insurance products involve making an upfront payment, or a series of regular payments, that will result in a stream of income. That income could start immediately or, in the case of a deferred annuity, at a later date.

Annuities can also be fixed or variable. The former generally offers a fixed return rate. The latter offers a return similar to that of a mutual fund, except it’s sponsored by an insurance company.

9. Separately managed accounts

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Financial advisers who use or recommend this investment with clients: 25%

Separately managed accounts are typically geared toward those with a high net worth. An asset management firm helps investors select a mix of securities based on their financial goals. These portfolios can offer diversification similar to what you would find in a mutual fund or ETF, but investors own individual securities instead.

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