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5 Investing Tips to Start 2022 Off Right

The Motley Fool 1/9/2022 Maurie Backman

A lot of people have resolved to invest more in 2022. If you're one of them, that's a great goal to aim for. And these tips could help you make the most of that effort.

1. Don't fear a stock market crash -- prepare for one

There were rumors flying around that stocks would tank in 2022 before the year even began, fueled largely by the emergence of the ever-daunting omicron variant. But so far, stock values don't seem too impacted by omicron and the general COVID-19 surge.

Furthermore, even if we are headed for a stock market crash this year, wasting energy getting nervous about one isn't going to do you any good. Instead, focus on the things you can do to get through a downturn unscathed, like boosting your emergency fund and making sure your portfolio is nice and diverse.

2. Rely on the power of the broad market

We don't know what sectors of the market will thrive this year, and which will have the opposite experience. What we do know is that while supply chain bottlenecks have eased compared to where things stood a few months ago, omicron has the potential to shutter factories and transportation systems both domestically and abroad. And so it's hard to pinpoint what impact, if any, that will have on stock values.

That's why a good bet is to invest in the broad market this year. You can do by loading up on S&P 500 ETFs.

3. Look at dividend stocks

The great thing about dividend stocks is that they tend to keep paying investors even when share prices drop. Having dividend stocks in your portfolio is a good way to hedge against a market downturn. And it's also a great way to secure a steady income stream that you'll be free to reinvest.

4. Proceed with caution when buying cryptocurrency

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Many investors have enjoyed great success with cryptocurrency, and even if you're new to it, you might follow in their footsteps. But one thing you should know is that cryptocurrency is very risky.

For one thing, cryptocurrency has only been around for a little more than a decade. Compare that to the publicly traded companies that have been around for well over 100 years, and it's easy to see why the idea of owning digital coins can be unsettling.

Furthermore, we don't know what regulations are in store in the world of crypto. But if changes come through that make cryptocurrency less appealing from a tax standpoint, it could drive the value of your digital coins way down.

That's why it pays to take it slow when it comes to buying cryptocurrency. If you've yet to really dabble in it, start by investing a small percentage of your money and see how you fare rather than go all in.

5. Eke out as many tax benefits as you can

The upside of investing in a traditional brokerage account is having unrestricted access to your money and not having to worry about things like annual contribution limits. But if you're going to invest more this year, it pays to do so in a tax-advantaged manner. And that means capitalizing on retirement plans like 401(k)s and IRAs.

Another lesser-known way to invest in a tax-advantaged fashion? An HSA. Though HSAs are limited to savers enrolled in high-deductible health insurance plans, they're actually triple tax-advantaged and their funds don't ever expire. This means that the money you invest in an HSA today can be accessed in 20, 30, or 40 years from now, once it's grown into a much larger sum.

Ramping up on the investing front is a great idea for 2022. Follow these tips to maximize your wealth-building potential.

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