4 Things People Are Investing In This 2021
In order to enjoy a worry-free and comfortable future, investing is a must for most people. When a crisis arises, such as the COVID-19 pandemic, a seemingly stable economy can quickly flip, leaving those who weren't financially prepared to find other ways to fill their stomachs and keep up with daily expenses.
2020 has been affected by the economic downfall due to the pandemic and is more volatile compared to this year. Now is actually a good time to start investing or making some adjustments in your current investment portfolio—perhaps, even taking on not-so-traditional investments. There's no better time than now to prepare for any unwanted events that might happen in the future.
With that said, here are four things that people are currently investing in this 2021:
Investing in the stock market is still the way to go this year.
Although the stock market is just as volatile as last year, investing in stocks has always been about playing averages, and it strongly favors maintaining a big position in stocks.
With that said, you need to be selective. Major indices such as NASDAQ100 and S&P500 have largely moved forward on tech stocks. However, if that industry starts to head south, it can drag these major indices to the pits.
The best solution is to diversify and move beyond tech stocks.
Defense stocks are also a good place to start. Although they underperformed last year, they still hold over 30 years of good track record of new highs within 30 months. Also, it is expected that a rebound in solid defense spending and commercial aerospace will happen this year, outperforming the market.
Another stock sector to consider is biotech. With the effectiveness of vaccines for COVID-19 still in the first stages, biotech should continue to be a strong industry in 2021 regardless of how the general market is performing.
Certain commodities such as industrial metals like the Platinum Market appears to have a good reward-risk trading this year.
However, gold seems to take the lead. Gold is globally considered as a liquid asset, a tangible inflation hedge, and offers long-term store value. Plus, its recent 45% surge in the last half of 2020 makes it an appealing investment channel with strong returns in 2021.
Not only that, but gold is also regarded as a good diversifier, thanks to its low correlation with other asset classes, particularly stocks. And this property is even more pronounced during the tough times when gold becomes a rescue asset.
There are different ways for investors to invest in gold. They can buy and hold physical gold such as bars or coins, gold accounts, or gold ETFs. They can also indirectly invest through gold mining futures and options or stocks.
For small-time investors, it's wiser to opt for direct methods of investing in gold such as buying gold bullion—bars, coins, or other physical gold forms. A 5% to 10% allocation in gold is considered healthy for your portfolio.
3. Real Estate
The real estate turbulence from when the pandemic hit in 2020 and the current steady rise in residential prices make this market a mixed bag this 2021. But it's also a good reason why it deserves a closer look this year.
The real estate market stayed low for the previous three quarters of 2020 and heated in the last quarter. The recovering economy means an increase in property prices—a good reason for investors to bet on this market in anticipation of the eventual containment of the pandemic.
To invest in the real property market is to simply buy and own properties, then have tenants to live there. In most cases, you'll pay for the down payment and your bank can finance the rest. You get the appreciation and rental income from the property.
4. Owning a Business
Moving away from traditional investments, you can also use your money and establish your own business.
Investing in your own business can produce the highest returns of all investment options. However, failing can also cost you lots of money and stress. On the other hand, having a well-planned business produces steady growth and income for the long-term. Also, some businesses offer low startup and ongoing expenses, particularly online businesses.
One way to approach this is to invest part of your money into establishing a business and investing the rest somewhere else. Also, you can create a part-time business that you can do on the weekends or evenings. This way, you don't have to give up the security of a regular job while trying to make extra money.
There's no doubt that investing is a great way to build your wealth, especially during these uncertain times. With that said, you need to spend time learning and understanding the different investment options you have to make smart decisions and bring about success.