Investing in 2021 is in full-swing, as more people try and recover from the economic slump over the past year. If you want to begin investing this year, there are quite a few options to consider:
8 Investment Ideas to Build Your Portfolio In 2021:
Bonds are one of the safest ways to invest money in 2021. They are low-risk investments that offer a lower rate of return than stocks, but a higher rate of return than savings accounts. Bonds are typically issued by corporations, but they can also be issued by the federal or state government.
You’ll need to wait until the maturity date to receive the return that you’re seeking from the bond.
A conservative portfolio will make heavy use of bonds, and they’re a very good option for someone who is closing in on retirement. Low risks are good, but you also will receive low rewards – it’s a tradeoff.
2. Mutual Funds
A mutual fund is a company that pools money from many investors to purchase securities, such as stocks, bonds or money market instruments. Mutual funds provide investors with a professionally managed portfolio of securities, and they can be purchased through any brokerage account.
You’ll want to be sure to check the additional fees charged on these accounts because they can reduce your profit margins significantly.
People are getting back into casinos, and after a year of being forced to stay home and in lockdown, players are ready to flock back to casinos. Investors are pouring their money into companies that operate casino websites and standard casinos.
Online casinos soared in 2020, and the trend is likely to continue this year.
We won’t name specifics, but one casino ETF rose 53% in the past 12 months.
4. Exchange Traded Funds (ETFs)
An exchange traded fund (ETF) is a marketable security that tracks an index, a commodity or a basket of assets like an index fund. ETFs trade like common stock on a stock exchange and are bought and sold at market price.
If an ETF sounds a lot like a mutual fund, it is, but trading times are different.
You can buy and trade an ETF in real-time, so if you know that the market is going to take a dip, you can sell immediately. Mutual funds are only sold at the end of the day. You can put your sell order in at 10am, but the order won’t be executed until the end of the day, which can mean staggering losses for you.
5. Real Estate
Real estate is another safe investment in 2021. Investing in real estate is a way to create wealth and build passive income. You can invest in real estate by purchasing a property and renting it out, or you can invest in real estate by purchasing shares in a real estate investment trust (REIT).
When you invest in an REIT, you’re essentially investing in a holding company that owns real estate.
These holding companies can own:
- Commercial property
- Office space
- High-rise buildings
When investing in an REIT, they often payout dividends each quarter or annually, which is passive income for you. If you want to invest in an income-generating asset, REITs or even rental properties are a great opportunity.
Cryptocurrency has had an interesting year. It started out with crypto prices on a steady rise, but then they took a tumble. This was followed by a recovery, a sharp drop, and then a sort of leveling out after it hit highs of over $60,000 and fell over $20,000 in a month.
The volatility of cryptocurrency is one of the main reasons it’s such an exciting investment vehicle. But, just as your investment portfolio should be diversified in order to avoid risk, so should your crypto investment portfolio.
If you want to add these alternative investments into your portfolio, be sure to:
- Keep your portfolio allocation of crypto conservative
- Invest in Bitcoin, Ethereum and other cryptocurrencies
7. Pay Off Debt
When interest rates rise, or if the economy deteriorates, your credit card debt could become more expensive to pay off. If you want to avoid digging yourself into a deeper hole, then now might be a good time to pay off debt.
Let’s assume you’re paying a 15% interest rate on your debt. Even the best returns on the stock market are often not going to outpace the rate at which you’re being charged interest.
It’s better to free yourself from debt so that your monthly expenditures are lower, and you can invest the money you’re saving in other assets. Plus, if you ever find yourself financially in a bind, lower debt will make it easier to remain financially sound.
You can choose two ways to pay off debt:
- Pay off your highest interest cards first
- Pay off your lowest balance cards first
In both cases, you’ll want to take the money you’re saving and flip it into your next credit card using a “snowball” effect. Over time, you’ll be able to pay off your credit debt faster thanks to using this method.
8. Small-cap Stocks
Small-cap stocks are not going to be your Amazon or Google stocks, but they’re still a great option in 2021.
Small-cap stocks are being overlooked for the larger caps, but they have a higher chance of higher returns. Since these stocks have less of a presence internationally, they’re going to be less susceptible to currency fluctuations in other markets.
In 2021 when the world is moving back out of the pandemic, it may be safer to invest in domestic growth with small-cap stocks.
You’ll obviously want to mix in your large-cap stocks, too, for a balanced portfolio.
Investing is always going to be risky, and being sure to diversify your portfolio can safeguard you against large market swings. Since economies around the world are slowly starting to recover, it will be interesting to see what happens in the market.
Which investments will outperform expectations? Which will fall flat? That’s going to be the main question for investors going into the final half of 2021.
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