2020 is exactly what many will describe as “What a year”. Not only did the year in the wake of the COVID-19 pandemic disrupt healthcare and lives, but investments were also disrupted as a result of the pandemic. While many of these investment schemes recovered as the year slowly started to round off due to life starting to go back to normal, we can’t however deny that the year and trends it resulted in created new investment trends that can affect investments going forward. It is likely that 2021 will be another challenging year for investors as recovery from COVID-19 continues. In this article, we examine how to harness these trends to invest profitably in 2021.
According to expert opinions:
- There’s still no information on how fast the economy will recover after every strain the pandemic put on the economy.
- It will be a wise move for investors to focus more on long term benefits than short term benefits as the performance of the market is still unsure.
- Investors looking for opportunities may find them in disruptor stocks, non-U.S. equities, and sectors that meet consumers’ needs, experts said.
- Before investing money this year, investors should build up their emergency fund.
3 Tips To Choosing The Ideal Investment Vehicles in 2021
Where you invest in 2021 or any other year should be informed by your long-term financial goals, your time horizon, and your tolerance for risk. That said, here are a few tips for investing right in 2021.
- Seek Out Disruptors
Disruptors are companies that introduce models that are otherwise described as groundbreaking. These companies most times start slow but as more attention is gathered towards their business model, they experience groundbreaking growth. Fintech companies for example, have become notable as groundbreakers as seen in the recent growth these companies have experienced. Stocks invested in these companies will have grown at such a considerable rate. In some instances, the stocks of disruptors like Amazon, Facebook, Netflix, or Uber have enjoyed years of strong price growth, but this type of investment also can be risky.
Tryzna said investors should look for “companies who are disruptors in their industries,” such as Airbnb and Tesla. He said newly listed Airbnb used disruptive technology to upend the lodging and hospitality sector. Another example he pointed to is electric car maker Tesla. Tryzna said to look for other such companies to invest in that are disruptors in their industries in the same way.
With every investment, disruptor investments inclusive, it is important to set up a mutual fund that helps limit the exposure of your portfolio to the risk of disruptors.
- Think About Consumers’ Needs
Watching how different changes the pandemic has brought has affected people’s lives may give insight into how to invest properly. As people get on with their lives, businesses that are directed at the new needs of people will be worthy of investment. Gatzemeier said that once the pandemic is under control, people will be ready to get on with their normal lives again. Stocks in real estate centered on office buildings may not be as profitable anymore as the pandemic has exposed many companies to moving fully remote. Investments in companies providing vaccines and travel agencies may soon become worth more than before. Stocks in these types of sectors may gain price momentum again after months of stagnating during the pandemic.
- Look Overseas
With the constant devaluation of the Naira, this is very important counsel. Many technological advancements have made investing in companies outside the country very easy. This makes for very useful means to protect the value of your money even as the naira falls. Looking overseas will also serve as a means of diversification in that it reduces the exposure of your investment portfolio to factors that affect only your country. With this, other factors from foreign investment help to increase the value of your investments and reduce domestic risks.
In all, 2021 has much more considerations investors need to know than previous years, this is because of the recovery of the economy post COVID-19 and the new challenges that are being posed as individuals try to transition to their new lives. It is important that for optimal profitability investors are able to take these trends into consideration as they invest.