What types of investment will thrive in 2021?
You see, analysts agree that 2021 will be no less as challenging as the year 2020. This is because the health, economic and social impact of the Covid-19 pandemic remains elevated in spite of the prospect of a vaccine.
But there’s always an opportunity in every adversity. So it was in 2020! Amidst the pandemic, many businesses were set up, and a new set of millionaires emerged. As a matter of fact, it was reported that U.S billionaires grew their collective wealth by a whopping 34 percent during the pandemic.
In a period of adversity, only those who look beyond the troubles see the opportunities. So in 2021, try to look beyond the challenges. Oil price dynamics, weak capital flows and dwindling global trades are some of the challenges that is forecast to define economic behaviour this year.
Understanding these and knowing how they affect consumer choices will point you to the opportunities.
Types of Investment that Will Thrive In 2021
So what are the types of investment that will thrive? In this post, I highlight 5 of these. Here are they:
Stocks made a lot of individuals millionaires in 2020. This is interesting considering that it was in the middle of a pandemic which drove stock prices down the hill in the first quarter.
S&P 500 which lost almost half its value in about five weeks in the first quarter, closed the year 16% up. Analysts say this is almost double its historic average annual returns in 40 years. In Nigeria, the NSE All Share Index recorded a YTD return of 50% at the close of 2020. It was the best performing stock markets in the world. The last time the NSE had such a stellar performance was in 2003.
The conditions that drove stock prices up in 2020 are not changing soon. Some of these factors include: unattractive yields on risk-free instruments (Treasury Bills and Sovereign Bonds), low interest rates on fixed deposit and savings accounts, and uncertainty around foreign exchange liquidity.
So in 2021, the stock market is likely to remain the only viable traditional investment option for many institutional investors. And retail investors are joggling to joint the party.
#2. Online Business
Millionaires continue to emerge from interne based businesses. In 2020, the pandemic pushed almost all businesses online as governments around the world enforced stay at home order. As a result of this, technologies and systems that are designed to facilitate doing business online thrive.
Even after the whole pandemic effect leaves us, doing businesses virtually will remain a new normal. Thus, the money is there for those who provide solutions, technologies and systems that make things easier or faster for companies taking their businesses online.
The good part is that starting an online business is one of the easiest things to do because there are many options. And you can do so with very small capital and scale as you gain mileage. This is also the time for you develop some essential skills that will help you provide services to established companies.
Skills like copy writing, coding and app development, and digital marketing are some of the skills that are and will continue to be in high demand.
#3. Gold and Silver
Gold and silver are precious stones that have enormous value. People have used gold for various important purposes for ages. But the most significant fact about these precious stones is that they serve as a hedge against inflation. Thus, gold values increases more in times of economic down turn.
Indeed, in this Covid-19 pandemic, Gold and Silver are catching the attention of investors more than ever. Gold prices reached a record high of US$2,000: a price level it has not attained since 2011. And analysts predict prices will go even higher as the pandemic continues to impact on global economy.
Average return on Gold was 18 percent in 2019. In 2020 it was above 30 percent. As long as governments around the world continue to print more money, alternative investments like gold and silver will continue to be attractive.
#4. Bitcoin and Cryptocurrency
Bitcoin and cryptocurrency generally is gaining momentum as an alternative asset class. Many governments around the world are coming to terms with the fact that cryptocurrency usage is inevitable in a digital economy. And they are beginning to develop regulatory framework around cryptos rather than outlaw them.
Many individuals who didn’t believe in it are increasingly having a rethink now.
Interestingly bitcoin also had one of its best years in 2020, up 165% year to day and trading at over US$20,000 per coin. The interest in crypto will rise even higher as more institutions adopt digital asset.
If you have not invested in cryptocurrency, now is the time to do so. There are so many quality crypto coin out there, though bitcoin is their king. Ethereum is also gaining ground and Defi has been identified by specialists as a trend to watch in 2021.
The good news here is that there are many online portals that make it easy for you to invest in crypto assets with little amount of money. Check out Luno and learn how you can easily invest in bitcoin with as little as US$2.
Learn more about bitcoin and crypto currency before attempting to invest.
#5. Real Estate
In both medium to short term, real estate can be the best investment. The major challenge with real estate investment is that it may require huge capital outlay.
However, with financial products like Real Estate Investment Trust (REIT), it is possible for small retail investors to invest in real estate. Though with REIT, you have no direct ownership of the property, investing in REIT allows you to share in the profit made by large real estate investors.
Again there are many ways you can invest and make money with real estate even if you don’t so much money. Now is the time to wake up and take advantage of the opportunities. The pandemic has forced down prices as businesses and very rich individuals are persuaded to sell their premium properties at distress prices.
The foregoing list is a product of my research. Of course there are many others. Help by sharing other types of investment you know will make people rich in this 2021. Democratize your knowledge by using the comment box.