bad Credit

Best Financial Stocks Of January 2022 – Forbes Advisor

Best Financial Stocks Of January 2022 – Forbes Advisor
Written by Publishing Team

Strong long-term performance. Over the past 30 years, financial sector earnings have grown faster than the economy as a whole, allowing financial companies to pay above-average dividends to their shareholders and creating stable price-to-earnings ratios. While past performance is no guarantee of future success, it can be useful to look back when measuring investment opportunities.

More organized after the Great Recession. The 2008 financial crisis exposed problems in the financial sector that governments around the world worked to address through regulation. Today, financial firms have to take more measures to avoid trouble, such as maintaining higher levels of capital to protect against losses. This reduces their risk compared to the sector in the past.

An opportunity to support the government in recessions. The health of the financial sector directly affects the health of the global economy. As a result, financial companies can count on special support during a recession or financial crisis. When banks ran into financial problems during the Great Recession, for example, governments bailed out many of them.

Take advantage of higher interest rates. Today, interest rates are close to historical lows. However, when it rises, banks, credit card companies, and other lenders can increase their profits by charging higher rates. Insurance companies can also earn more from their fixed income investments as interest rates on bonds rise.

Innovation from fintech. Financial sector stocks have benefited from innovations such as blockchain, mobile payment applications, and automated advisors, laying the foundation for further growth of the sector.

About the author

Publishing Team

Leave a Comment