Forty is a nice age to be. It combines much wisdom and experience with enough youth to do almost anything we may want to do. I loved my forties!

But life leading up to 40 can be expensive. People often have children, mortgages, busy lifestyles and other money commitments. So it’s not unusual to skid into our forties with zero savings.

Almost three decades to compound!

However, all is not lost. At 40, there’s still the biggest part of three decades before most of us can claim our State Pension for retirement. And that’s a useful amount of time for compounding investments with the aim of building a pot of money to add to the government’s retirement provision.

And let’s face it, the State Pension alone is unlikely to give us bountiful financial resources in our golden years. As I write, the full new State Pension is worth just £179.60 per week.

So, at 40, I’d take three steps aimed at changing my financial outlook. The first is to adopt the habit of regular monthly saving. And the second is to prioritise my saving by deducting it from the income flowing into my current account before paying any other living expenses. And I’d choose to do that by setting up automatic transfers from my current account into my savings and investment accounts.

But after building up a pragmatic cash cushion to fund emergencies, my third step would be to invest most of my monthly savings into stocks and shares. And that’s because shares as a class of asset have outperformed all other major asset classes over the long haul. Although there’s no guarantee they’ll continue to outperform.

A diversified approach to stock investing

One approach could be to invest in low-cost index tracker funds, such as those following the fortunes of FTSE 100, FTSE 250, America’s S&P 500, and others. Or perhaps into investment trusts and managed funds. And I do spread my monthly investments between several collective investment vehicles such as those.

But I’m also aiming to increase my annualised returns by investing in individual stocks I’ve researched and chosen carefully. And the reason is small increases in the rate of annualised return can compound to make a big difference to the size of an investment account over time.

However, as well as the potential for gains, all shares carry risks. And it’s not certain that any programme of stock investment will deliver a positive outcome. But I’d aim to mitigate some of the risks by focusing on the quality of underlying businesses first.

For example, I’d look for indicators that demonstrate a business may have a strong trading niche in its markets. So, for me, that means looking at things such as profit margins, consistency of earnings, and rates of return on equity and capital. But I’d also aim to buy stocks when they offer good value for the business, so price is important. And I’d want a business to have decent growth prospects and operational momentum.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Legendary investor Warren Buffett has a lot to say about choosing shares. The reason I, along with millions of others, listen is because of Buffett’s stellar track record.

Thinking about the coming year, there are a few of Buffett’s investment habits I plan to keep applying to my investing. Here are five of them.

Stick to what I know

Buffett emphasises the value of staying inside one’s circle of competence. That means focussing on possible investments in companies and industries one understands. That may sound obvious. But it can be tempting to buy shares in companies that seem to be growing fast but about which one’s knowledge is limited. Buffett firmly avoids that temptation. I will be trying to do the same.

Considering competitive advantage

Warren Buffett has a concept that he calls a “moat”. That is another way of talking about competitive advantage – whatever a company has which can keep its potential competitors at bay.

A business moat can come from a variety of sources. It might be a proprietary product as at Coca-Cola, entrenched distribution networks that are hard to replicate as at National Grid or an entrenched customer ecosystem as at Apple. But whatever it is, Buffett sees such a moat as an important source of a company’s pricing power. That is what enables a company to support its profit margins on an ongoing basis.

Kicking the tyres

Buffett often invests in businesses of which he has some personal experience. From Kraft Heinz to American Express, Buffett clearly gets to know some businesses as a customer and decides that they have investment potential for him too.

It’s not always possible to do that. For example, I would consider buying shares in Victrex but will never be a customer of its industrial polymers. But if I was considering investing in a company like B&M or Wetherspoon, for example, I would take time to use the service as a customer first. I wouldn’t base my investment decision on that alone. But it would help me add additional perspective to the information I could gain from a company’s financial reports.

Warren Buffett doesn’t speculate

Buffett is very much an investor not a speculator. He doesn’t try to make money by moving in and out of companies on a short-term basis. Instead, he tries to buy companies whose long-term prospects he likes, at an attractive price.

I try to adopt the same approach. Buffett has said his preferred holding time for shares is “forever”. Whether or not I hold my shares forever, I do think it is useful when buying them to consider shares as long-term investments. If I am already thinking about when to sell a share at the time of buying it, I may not be sufficiently persuaded for it to merit a place in my portfolio.

The importance of diversification

In his long career, Warren Buffett has bought some excellent stocks. But no matter how good he thinks a share may be, he always makes sure to hold a portfolio diversified across different companies and business areas.

That helps reduce his risk in case a company runs into unexpected problems. That’s an important risk management principle I also will continue to apply to my portfolio in 2022.

Christopher Ruane has no position in any of the shares mentioned. American Express is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool UK has recommended Apple, B&M European Value, and Victrex. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Among my stock market investments this year, those that have stood out are the FTSE 100 oil biggies BP (LSE: BP) and Royal Dutch Shell (LSE: RDSB). No points for guessing why. Oil stocks are classic cyclicals. Such stocks are those where demand is sensitive to where we are in the economic cycle. So when the economy is in doldrums, as we saw in 2020, the oil price crashes. And during times of recovery, it picks up. This time around, perhaps even more so. The economic slowdown associated with the pandemic also brought all travel to a halt. As a result, there was a big impact on these stocks. It was natural then, that as the recovery ensued, oil prices rallied and along with that, these stocks’ prices.

More upside to come?

I do not think that we have seen all the upside to these stocks that we are going to. Think about this. We are still under the cloud of the pandemic. Travel remains restricted and consumers are being cautious too. Once these trends are behind us, I think we could see even higher oil demand. Also, continuing economic recovery will increase oil demand. This could further boost both BP and Shell’s financial performance. 

Their improved finances could, in turn, result in higher dividends. These stocks boasted fairly high dividend yields pre-pandemic. But at present, they are nowhere near the highest dividend-payers. BP’s current dividend yield is 4.7% and Shell’s is 3.7%. These are not bad and are higher than the FTSE 100 average yield of 3.5%. But they are far from the 10%+ levels seen for the highest yielders. However, I am optimistic that their yields could rise.  

Moreover, these stocks offer me a nice hedge against inflation. The UK’s inflation is on a tear and is expected to remain so through next year. Many FTSE 100 and FTSE 250 stocks could be impacted by this as their costs increase. But the oil giants are on the right side of inflation. They are actually beneficiaries from it. So, even if other stocks in my portfolio suffer, these can offer a stabilising impact. 

What I’d do now

The big risk to oil stocks is another lockdown in 2022. If another variant of coronavirus emerges, who knows what could happen next? And if the last two years have taught us anything, it is to expect the unexpected. But I have to make my investment decisions based on the most predictable outcomes that I can see, and not on outlier events. Based on these, both oil stocks look quite good to me for at least the foreseeable future. Considering that their share prices are still below pre-pandemic levels, I think I am going to add to my holdings of these stocks in early 2022. 

Manika Premsingh owns BP and Royal Dutch Shell B. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The FTSE 250 index has seen a strong rise in the past year. And as would be expected, many constituent stocks have done quite well too. But there are some stocks that have really lagged behind, even though until not very long ago, they looked like stocks worth at least considering if not actually buying yet. 

What’s up with the Cineworld share price?

One of these is the cinemas operator Cineworld (LSE: CINE), which was the biggest FTSE 250 faller of the year up to 20 December, a recent Interactive Investor ranking showed. It has seen a decline of over 50%, much bigger than that for the next biggest faller, Trainline, which has dropped by around 40%. When I step back and look at the big picture, it seems to me that Cineworld has been really, really unlucky. 

Management made a big, bold move to acquire Regal Cinemas in the US by taking on huge debt a few years ago. I was nervous about the move even then, but it did not look quite as challenging as it does now. As long as Regal Cinemas continued to generate big revenues, it was entirely possible that it would have been able to pay off its debts. No one could predict that we would witness a global pandemic soon after. This necessitated taking on even greater debt, making its financial position even more precarious than before. 

Why I’m bullish on the FTSE 250 stock

But I am still pretty bullish on Cineworld stock, enough to have bought it earlier in the year. And I intend to hold it for some time at least, even though it is in a dismal place right now. It shed its penny stock status earlier in the year, but quickly fell back to below 100p as uncertainty about the recovery continued. It is trading at 32p as I write. But I am bullish because of its high sensitivity to incoming developments. 

Each time there is bad news on the virus, the stock dips and vice-versa. A similar pattern is visible when new movie releases happen. Blockbusters like the latest James Bond and Spider-Man movies have encouraged its share price upwards in the recent past. If the stock is so sensitive to relatively small developments, imagine how it would perform if we were to well and truly put the pandemic behind us. I think that could happen sooner rather than later. Just look at the progress we have made in the past year.

What I’d do

Of course it is always possible that we go into a lockdown in 2022, and stay there for a while. And that would impact Cineworld even more. But instead, I think the chances are that we could be out of the pandemic soon. I am sticking with the stock for now, even though it is undeniably risky. I might even buy more. 

Manika Premsingh owns Cineworld Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Early this year, I said that I would focus on buying FTSE 250 stocks in 2021. This was because even in February, it was clear to me that the index was due to make more gains. With vaccines developed, the beginning of the end of the pandemic seemed to be in sight. And that would mean economic recovery. 

Not quite forgotten in the pandemic troubles was the fact that the UK had also signed the Brexit agreement. This meant that its stock markets could — in theory — now start rising after years of being in limbo. The FTSE 250 index was particularly poised for gains, since it has a higher concentration of stocks focused on the UK market as opposed to the FTSE 100, which houses more globally-focused businesses. 

Where will the FTSE 250 index go in 2022?

The pandemic is still with us, of course, but the index has continued to show a healthy increase over the year. As of yesterday’s close it was up almost 12% from a year ago. I am glad I bought into the FTSE 250 rally in 2021. But the question for me now is this: where will the index go in 2022? There are two reasons I ask this. I added to my FTSE 250 stock holdings this year, and it would be good to know how far they might rise next year. Also, I want to decide whether I should focus even more on FTSE 250 stocks considering their recent performance. 

I think there is a good chance that the index could continue to make gains in 2022. The recovery should continue now that there seem to be even lower chances of restrictions than we saw in 2021. However, I think that the speed of the recovery could remain underwhelming, which could influence stock market activity. This is because there are a number of risks on the horizon as well. 

Risks to the index

Inflation in the UK, for instance, just touched 5% on a year-on-year basis. And it is expected to stay elevated in 2022 as well. This is not good news for companies’ financial health. Their earnings could be squeezed as costs rise and consumer spending need to be allocated with greater care across products and services, potentially slowing down revenue growth as well. If FTSE 250 companies’ performance suffers, it could reflect in their dividends, outlooks and stock prices as well. 

Also, as I mentioned, the pandemic is not over yet. The UK has just reported a record rise in coronavirus cases. Despite what I said earlier about the chances of restrictions diminishing, higher case numbers can still increase the risk, in my view, of our going back into a lockdown or semi-lockdown. It had seemed quite likely that England would see some more restrictions in the festive period. Even though that did not happen, I think it is possible that some new rules might be brought in. That could dampen the market mood. 

How I’d invest in 2022

However, 2020 has taught me that there are always investment opportunities around, irrespective of what is going on with the broader markets. I like this stock, for instance, which is dirt-cheap, despite the rise in the FTSE 250 index this year. I would focus on such investments. 

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Over the past couple of weeks, I have been looking for FTSE 100 stocks to buy for my portfolio in 2022. A couple of equities have appeared on my radar as top buys, both of which I would add to my portfolio right now. 

Recovery shares to buy 

The first company on my list is the FTSE 100 bank Barclays (LSE: BARC). I want to own some banks in my portfolio for the year ahead. I think there are two tailwinds that should help this sector outperform next year. Rising interest rates and the economic recovery may provide the perfect environment for lenders to grow earnings. 

I would buy Barclays over its other peers in the sector as the bank has more diversification. Its international investment bank helped it pull through the early stage of the pandemic as it was able to take hefty fees from clients looking to raise cash from investors.

This diversification could come in handy next year. If there is another wave of fundraisings, it could even be a third tailwind for the group. 

Despite these growth factors, the stock looks cheap. Shares in the corporation are currently trading at a price-to-book value of around 0.6. Few other companies in the UK’s leading blue-chip index offer such potential for the year ahead while trading at such a depressed valuation. 

Of course, it seems unlikely Barclays will be able to navigate the year ahead without dealing with some challenges. These could include further pandemic lockdowns and disruption to its business. Inflation may also prove to be a challenge for the enterprise to navigate. 

FTSE 100 property champion 

The latest retail footfall figures show that consumers are moving away from shopping in city centres. Instead, they favour buying online, out-of-town retail parks and the local high street. 

These trends are good news for real estate investment trust (REIT) British Land (LSE: BLND). The company has been selling its commercial property assets in cities and reinvesting the proceeds in out-of-town parks. It has also been buying up property in the scientific and research sectors. These assets tend to be far more defensive than other types of property. 

As well as these portfolio changes, the company is also benefiting from a general recovery in the overall commercial property market across the UK. Asset values are rising again after two years of stagnation. 

These are the reasons why I would buy shares in the FTSE 100 company next year. As it pushes forward with its portfolio development plan, and property values rise, the market should begin to re-rate the stock. The shares are currently trading at a discount to net asset value, which I think is unwarranted. 

Some challenges British Land could face next year include higher interest rates which will increase the cost of the group’s debt and may reduce profits. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and British Land Co. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Recovery stocks were expected to perform well this year after vaccines were developed last year. And many of them have indeed seen a pick-up in both performance and investor interest. But this particular stock has far surpassed all others. Watches of Switzerland (LSE: WOSG), the FTSE 250 watches and jewellery retailer, saw a massive 138% increase in its share price over the past year up to 20 December, a report by Interactive Investor showed. It was the biggest index gainer in 2021 up to that date. As I write, it has gained even more, rising by 150% from a year ago!

Watches of Switzerland races ahead

The stock market rally that started in November 2020 impacted it positively, like it did all recovery stocks. Its price got back to pre-pandemic levels quickly enough. But it was this year the stock really rallied. Its strong results have a role to play in this. For the half-year ending 26 October 2021, the company reported a strong 41.5% increase in revenue compared to the same half a year ago. Its net profits increased by an even stronger 78.9%! It also upgraded its full-year guidance last month for both revenue and profits, despite the fact that tourism and airport-related business is expected to remain below pre-pandemic levels. This led to a sharp rise in its share price. 

If the economic recovery continues, I reckon that the stock could continue to make gains. Periods of economic expansion are good for discretionary spending on items like watches and jewellery, which the retailer focuses on in the UK and the US. Considering that the UK’s household savings reached all-time-highs in the past year, higher spending post-pandemic could continue to be strong. 

Risks to the FTSE 250 stock

However, the recovery numbers have been somewhat weak so far. And with the Omicron variant around now, it is possible that the weakness will continue into 2022. This could slow down any continuing increase in the FTSE 250 stock’s price. And it could slow down stock markets as well. In any case, I think its price-to-earnings (P/E) ratio is pretty steep at almost 48 times. It is entirely possible that that ratio may look far more reasonable in a few months’ time when its next earnings report comes out (if its earnings remain strong). But there is still some time before that happens. 

What I’d do

In the meantime, the Watches of Switzerland share price has risen a bit too much, in my view. To answer the question asked in the title, I think it might indeed be too late to for me buy the stock. If I had bought it a year ago, it would have been a good time to do so. But with question marks around the recovery again and its own share price rise, I am not entirely convinced it is a good idea to buy the stock now. I will wait and see how the overall situation plays out in the next few months and decide on it then. I will focus on stocks I believe have more potential for now. 

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I’m searching for penny stocks I think could soar in value in 2022. Here are four I’d buy for next year and look to hold for the long haul.

Getting aboard the gold train

I think owning gold stocks could be a good idea as we enter a potentially-volatile 2022. It’s why I’m considering adding Greatland Gold to my shares portfolio today. The continued Covid-19 crisis, economic turbulence in China, and runaway inflation might well blow prices of safe-haven gold to the stars next year. The persistence of supply chain problems might also help yellow metal prices if they derail the economic recovery.

I like this particular miner, following a raft of positive drilling updates in recent months. Encouraging news on its Juri project in Western Australia helped Greatland Gold share price hit six-week highs just before Christmas. I’d buy the business even though disappointing exploration news is a constant threat that could pull share values lower again.

Shifting through the gears

Car and car-part manufacturers might continue to struggle in 2022 if semiconductor shortages keep hampering auto production rates. Ceramic brake producer Surface Transforms is one such share that could experience such difficulties. But, as a long-term investor, there’s a lot I like about this share. More specifically, I think it’s a great way to ride rising sports car sales in the years ahead.

The rising number of high-wealth individuals means demand for premium vehicles looks set to soar. Analysts at Statista think 937,400 high-performance autos will roll out of showrooms in 2022, up from 894,800 this year. And the number is expected to increase to 947,100 in 2023 too. Surface Transforms products can be found on the vehicles of mainstream OEMs as well as more niche manufacturers.

A way to play the wood boom

The use of wood as a construction product is soaring. This is primarily because builders are switching to timber from other more environmentally-destructive materials as concerns over sustainability and carbon footprints increase. This is why sales volumes at Woodbois Limited are flying and should strengthen further, in my opinion.

This penny stock supplies sustainable African hardwood and hardwood products from its facilities in Gabon and Mozambique. It has 470,000 hectares of forest on its books and continues to build its land holdings to match booming demand. I’d buy it even though a downturn in the broader construction market would significantly hit income levels.

A steppe in the right direction

I’d also buy Kazakh cement manufacturer Steppe Cement in spite of this danger. This is because the long-term outlook for the country’s construction sector looks rock-solid as wealth levels grow. Increased urbanisation meant that, even in spite of the Covid-19 crisis, construction activity in Kazakhstan leapt 11.2% year-on-year in 2020.

Steppe Cement’s latest financials showed revenues up a healthy 16% between January and September as demand for its building material soared. I’d snap up this penny stock, even though foreign currency fluctuations are a constant risk.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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