2021 was one of the most exciting years of all time in the financial markets. The global stock market returned a shocking 30%, plus meme stocks, cryptocurrency, NFTs, and real estate gave investors more opportunities for profit than ever before. It was virtually impossible not to earn double-digit returns—if you knew what you were doing. In the wake of mad stock, crypto, and real estate rallies, many amateur investors lost their shirts and then some. Simply put, we didn’t think anything crazier than 2020 could possibly happen, and then 2021 came along.
But does the mayhem end in 2022 or is this just the beginning? With record-high inflation, global supply shortages in everything from technology to food, intense climate emergencies, and more COVID variants creeping up the Greek alphabet, it seems there’s no end to the chaos. It’s an overwhelming time, but remember that periods of great change are when fortunes are made. Is 2022 your year? As a financial expert, I’m sharing my two cents on what to look for in the upcoming year.
More unique financial products
How do you satisfy insatiable investors in this market? You keep giving them more to invest in. We saw new financial products like CDRs (Canadian Depository Receipts) hit the market, and fintech brands like Wealthsimple Trade started allowing users to buy fractional shares of big stocks. Both of these vehicles allow retail investors to own a part of expensive securities that boast quadruple-digit stock prices, like Shopify and Amazon.
Is it cool and fun to get a piece of your favourite tech giant for a few hundred dollars? Yes. Will this make any real difference in your returns? Likely, no.
CDRs and Fractional Shares are just two of a new trend of gimmicky financial products designed to wow new investors who haven’t been in the game long enough to realize these tools aren’t anything special. After all, you’re technically getting a fractional piece of every company in an ETF when you buy shares! But ETFs are old and boring now, and young investors don’t want the products their parents own.
I expect 2022 will bring more “new” investment products to attract Gen Z. Hopefully something creative and interesting comes along, but I suspect it will be more of what’s already on the market, simply packaged differently. After all, there are only so many ways to sell a stock!
Cryptocurrency ETFs hit the Toronto Stock Exchange in early 2021, but America lagged behind until October, when Bitcoin futures debuted on the New York Stock Exchange. These are two different products that offer fundamentally the same thing: the chance to add a cryptocurrency position to tax-sheltered accounts.
I carved out a position in both Bitcoin and Ether in my TFSA, RRSP, and even my daughter’s RESP, making cryptocurrency a long position in all my registered accounts. As a crypto enthusiast, I love the chance to tax-shelter some of my cryptocurrency investments. As a financial expert, I recognize this is the beginning of cryptocurrency’s mainstream acceptance.
The US stock market sets up for another bull run
Analysts, regulators, and investors have been saying the US and global stock markets can’t possibly go any higher, and then they always do. The incredible gains we saw in 2021 will likely continue into 2022.
Will we see the stock market crash we’ve all been waiting for? Doubtful, but expect the same volatility. 2021 was marked by quick and extremely short-lived dips, and we can expect more of those in the new year. If you’re suffering the pain of watching 5% lopped off your portfolio in a day, just check again tomorrow and things will likely be back to normal. With the market dominated by trading algorithms and “buy the dip” redditors, even when things go down they don’t stay down for long.
Some bearish analysts and investors are predicting cooler market returns in 2022, and even as much as a -30% correction. While we probably won’t see another year of 25% returns, I don’t think things will trend negative, even though I would love them to! There are few things I want more than the chance to build my portfolio over two or three bearish years rather than being forced to buy stocks at higher and higher prices. Alas, I’m not holding my breath for 2022 to be the year this dream comes true.
Welcome to the Metaverse market
If you don’t already know the difference between hot and cold wallets, what is a seed phrase, and can explain what the letters NFT stand for, you better learn fast. Anyone who thought cryptocurrency was just a fad is already eons behind. The modern conversation is now around NFTs, digital goods, and the Metaverse.
Millennials and Gen Z have spent most of their lives straddling real and digital worlds, and now those will be merging as one. In fact, thanks to the pandemic, they already have. If you’ve ever played Animal Crossing or Fortnite, used an Instagram filter or a Zoom background, you’ve already dipped your toes into the Metaverse. The Metaverse represents a blending of your real and virtual life—in a few years we might not even consider them separate and distinct things anymore.
In the Metaverse, you’ll be buying digital goods so make sure your cryptocurrency wallet is ready. In late 2021, a plot of digital real estate in the online marketplace Decentraland sold for a whopping $2.4 million. Thanks to the advent of NFTs, digital goods are becoming more and more mainstream, and their growing popularity will be tied to growing utility and growing value. If you’re not excited about owning a piece of digital real estate, don’t worry! NFTs mean the digital goods available in the future will range from fashion items to make-up filters.
Most NFTs are on the Ethereum blockchain, so now is the time to set yourself up with a wallet and buy some Ether if you want to participate in the Metaverse in 2022. I don’t know if land parcels in Decentraland appreciate at the same rate as Toronto real estate, but at least you can say you’ve diversified your portfolio.
2022 is the year cryptocurrency becomes actual currency
When you do dare to leave your virtual world for the real one, you’ll be able to take your crypto with you. 2022 is going to bring Bitcoin and Ether to your handheld wallet.
Cryptocurrency credit cards have actually been around for a few years, but 2022 will be the first year we see them crop up in the public. New releases like the cashback Visa from Shakepay, a cryptocurrency exchange platform where more than 2% of Canadians have accounts, let you earn Bitcoin for your everyday spending in Canadian dollars. But you won’t just earn Bitcoin— soon you’ll be able to spend crypto at more retailers than ever.
While Bitcoin has been an acceptable currency at various online retailers for a few years now, more brick and mortar stores like the Toronto Brewing Company will accept cryptocurrency as payment.
Final thoughts on investing in 2022
Chances are if you dabbled a bit in everything from stocks to real estate to crypto in 2021, you exited the year richer than ever. 2022 will bring even more opportunities, but you have to be willing to keep up. Things are moving faster than ever, and the only thing rising faster than inflation is the number of places to park your money. As always, the best thing to do is diversify your portfolio, automate as much as you can, and take calculated risks. But don’t forget to have a good time! Finance is mayhem now, but it sure is fun. I’ll see you in the Metaverse!