About 55% of the American population own stock in at least one company. That means that 55% of Americans took a hit in 2020 given the economic collapse and that many of those people are looking for ways to claw back come ’21.
So, what does smart investing look like next year? What can the average person do to recoup losses and set themselves up for big financial gains for the rest of the decade?
If you’re curious to know where to place your money and where to avoid placement, keep reading. In this post, our team lays out investing trends we think can inform your strategy.
- Continue to Look at Technology
While we think that ’21 will bring more people together, technology will still gain momentum through the year and decade. Most analysts are confident that several offices will remain in a work from home pattern, at least partially, in perpetuity. Some people will also remain skeptical of vaccine efficacy and will continue to hunker down, using technology to communicate rather than leaving their homes.
Look specifically at video/telecommute software to keep growing!
- Consider COVID Bounce Back Stocks
Speculation is strong that the world will largely return to normal by the end of ’21. With that, companies that were particularly hammered by COVID and have managed to hang on may make roaring comebacks.
Our favorite bounce-back stocks in that vein are companies in the hospitality industry and the airline industry. Both are poised to benefit from skyrocketing demand and some may even benefit from government bailout packages.
- Keep Your Money Secure
Some people are taking more of a wait and see approach to ’21 rather than getting back into the stock market in a big way. We don’t question those individuals and recommend that you look to shelter at least a portion of your assets as well.
Strategies for sheltering while still making money would include sticking your cash in a CD or high-interest savings account. Both accounts are federally insured and will net stable (albeit not particularly high) returns.
You can learn more about secure, interest-bearing accountsat https://www.farmersbankidaho.com/personal/internet-banking or through your local banking institution.
- Buy Businesses
For bullish investors, there is a lot of opportunity in the business investing market. Companies that have been hit hard by government-imposed lock downs may be desperate for cash to live another day.
Buying hobbled businesses for pennies on the dollar could mean getting huge returns when the economy comes around. Even if you don’t want to buy a business outright, picking up shares in privately traded companies could put you in a position to enjoy silent partnership status and sizeable returns for the foreseeable future.
- Explore Healthcare
Healthcare stocks are going to be tricky in ’21 but several people speculate growth in this zone. Certainly, during inoculation periods, healthcare will be strong which should be the case for the front half of ’21. What we don’t know is how people will perceive healthcare once its importance fades from the headlines and the last thing anybody wants to talk about is doctors’ offices.
Investing in healthcare stocks that are directly tied in with vaccine manufacturing is a particularly risky bet in ’21 given that headlines regarding likely side effects will make these investments volatile. Be aware of that before dumping cash into Pfizer, Moderna, Johnson & Johnson, or similar buckets.
- Don’t Bank on Dividends
There are a lot of investors that build their whole trading strategies around getting dividends. We don’t blame those people as dividends can produce sizeable quarterly profits that some are even capable of living off of.
Problematically though, many companies have chosen to suspend their dividends and instead, use that money to keep their organizations afloat or help them better future-proof.
That divined deferral will last into ’21 if not for the whole year. That would make it a poor idea to invest with the hope that you’ll be able to profit share with organizations you put your money into.
- Get Diversified
Diversification of assets has always been a smart investing tenant to follow. After 2020 though, it has become clearer than ever that not putting all of your eggs in one basket is a great idea if you’d like your portfolio to weather adversity.
Don’t let 2021’s bounce back vibes excite you so much that you forget it’s not a great idea to dump all of your money into a single industry. Continue making diversification of assets a foundational value of your investments and you’ll position yourself for a great ’21 and beyond.
- Invest in Yourself
Our team maintains that the best investment anybody can make today is one in themselves. Whether it’s investing in your confidence, education, or some other aspect of your being that’ll improve the quality of your life, go for it.
Self-investment can pave the way for better jobs, relationships, and a more fulfilling human experience.
Those are benefits that are well worth pursuing.
Smart Investing Doesn’t Take a Lot of Effort
One of the beautiful things about smart investing is that you don’t have to be a savant to value it. Simply invest with intention rather than following the pack and chances are, you’ll make sound decisions.
The market, of course, changes as do global conditions. Keep your ear to the ground regarding changes that could out date some of the more topical advice we’ve shared.
Are you looking for additional strategies or advice on investment products? Do you want to make ’21 your best year financially yet? If so, check out more of the content we have available on our blog!