Despite a generally lackluster outlook for 2012, there are some areas that offer both short and long term growth opportunities.  We are looking at categories of investment, not specific stocks or bonds. We will be happy to provide specific names to those interested.
 
Fixed Income. With rates as low as they are and with an outlook of retained low rates, there is a real need for yields higher than sub 1%.  Strategic Income funds have been yielding 4-6%, certainly with more risk than insured savings accounts, but in a diversified portfolio of fixed income instruments this is a manageable risk. Floating rate funds are tied to corporate borrowing with rates that will increase with inflation.  This minimizes the risk of loss due to rate increases. Total Return funds also offer diversification within the portfolio, and have been generating total returns of 3-4% of late. There are also funds that concentrate on Master Limited Partnerships, yielding up to 7%. Two other options in fixed income are Build America Bond funds with high yields and good safety, and ultra short bond funds, delivering a bit more than the banks.
 
In he past, we have mentioned short term fixed annuities. These very safe alternatives are available in maturities as short as one year, and yield as much as four times what you will earn in the bank.
 
Dividend paying stocks. The yield on the S&P stocks averages about 2.3%.  There are stocks in the index that pay a consistent dividend as high as 6% year in and year out. Even a broad index investment in the S&P 500, which was flat in 2011, would have generated a better return than funds held in the bank. The best way is through a portfolio of consistent dividend paying firms that have a solid franchise for their basic business model. Communications firms and Utilities are steady providers of good dividends. For those not bothered by their business, tobacco companies have generally paid high predictable dividends as well. Big Pharma, the major drug producers also generate higher than average dividends.
 
Emerging markets like China, Brazil and India had very rough years in 2011, their markets were down an average of more than 20%. There is a strong case for recovery here, and these countries, with growing middle classes, are worth serious consideration. While Europe may well languish for a period of time, the emerging markets are still vibrant and capable of strong recovery. The best strategy for everyone is to stay invested. Be diversified, but you are not being rewarded for parking your money. Think about banks, they are paying you less than 1/2 of 1% to leave your money with them - obviously, they have found places that generate higher returns for them, enabling them to make profits. Specifics and answers to questions are always available, please contact anadolna@associatesgroupinc.com