As the New Year approaches, most investors I’ve spoken to are glad to leave 2022 behind.
You can count me in, too.
The year has been an annus horribilis for most investors as markets around the world tanked along with surging inflation and higher interest rates.
But even as these investors nurse painful double-digit losses on their portfolios, it’s crucial to ask – what can you expect for 2023?
Will markets stage a tentative recovery?
Could inflation finally peak and start easing?
And will interest rates start to moderate as the US Federal Reserve puts the brakes on the most rapid hiking in history?
Most importantly, how can you position your portfolio to ensure it can do well next year?
Your investment wish-list
Christian singer Amy Grant has a popular Christmas tune called “Grown-Up Christmas List”.
The song lyrics talk about a perfect world where “wars would never start”, everyone can “find a friend”, and “right will always win”.
The song is hopeful, inspiring and uplifting.
As we face an uncertain 2023, you should imbibe the essence of the song into your investment wish list.
It’s also a great time to come up with a set of realistic investment resolutions to carry you through next year.
Although you may face numerous uncertainties for your investments, you should continue to feel hopeful for the future.
Why do I say this so confidently?
For the simple reason, that great businesses will always triumph and thrive in the long run.
There is no doubt that in the short term, economic woes, supply chain issues and higher borrowing costs will weigh on numerous businesses.
The world is even bracing for a painful recession in 2023 if the Centre for Economics and Business Research (CEBR) gets its projection right.
But if you have selected the right businesses to own, you need not worry.
Let’s see what else you can do to navigate the markets in 2023.
Leaving the dividend tap on
One simple resolution you can make is to focus on dividend-paying stocks.
No matter what happens to the economy or stock markets, dividends represent a tangible return on your investment and put cold, hard cash in your pockets.
After receiving these dividends, you can choose to use them for your daily expenses or reinvest them by buying stocks at great valuations.
REITs are a boon for dividend investors as they continue to pay out distributions through good times and bad.
Solid, dependable REITs such as Keppel DC REIT (SGX: AJBU), Mapletree Logistics Trust (SGX: M44U) and Frasers Logistics & Commercial Trust (SGX: BUOU) continue to earn a stream of rental income which they can reliably distribute to their unitholders.
Other dividend stocks such as VICOM Limited (SGX: WJP) can also continue doling out cash payments as their business remains resilient.
The tried and tested way
Another resolution you can add to your list is to stick with the tried and tested blue-chip names.
The three local banks, namely DBS Group (SGX: D05), United Overseas Bank Ltd (SGX: U11) and OCBC Ltd (SGX: O39) are riding high on interest rate tailwinds.
All three lenders also dish out attractive dividends.
Singapore Exchange Limited (SGX: S68) continues to thrive with increased interest in its foreign exchange products and suite of derivatives.
The bourse operator also pays out a quarterly dividend of S$0.08 per share.
Chugging along just fine
It’s also a good idea to slot a few recession-resistant businesses into your portfolio.
Sheng Siong (SGX: OV8) has shown its ability to hold firm during the pandemic by selling a range of food products, necessities and household items.
Integrated healthcare services provider Raffles Medical Group (SGX: BSL) offers a comprehensive suite of healthcare services that many cannot do without.
A bright outlook for the future
Even as CEBR forecasts a gloomy 2023, it has also optimistically projected that world GDP will have doubled in 15 years.
It estimates that by 2037, the East Asia and Pacific region will account for a third of global output.
Of note, China will overtake the US as the world’s largest economy by 2036 while India looks set to become the world’s third-largest economy by 2032.
These forecasts may look outlandish with the troubles we are facing.
However, it’s a good reminder to us that the world can look past its short-term worries and continue growing at a steady clip.
And that’s the mindset you should adopt when filling up your investment resolutions for 2023.
Want to know what to expect in the stock market in 2023? Which were the best performing stocks and blue chips in the Singapore market in 2022? Be prepared for 2023 with our special FREE report. Click HERE to download “Year in Review 2022”
Disclaimer: Royston Yang owns shares of VICOM, Keppel DC REIT, Frasers Logistics & Commercial Trust, DBS Group, Raffles Medical Group and Singapore Exchange Limited.