How to make 2021 the best year for investments and the strategies to follow

Due to the devastating economic climate caused by the coronavirus pandemic, many Americans suffer from financial hardship. However, many people have benefited from the stimulus payments the government has provided.

Not only are a significant number of Americans benefiting from stimulus payments, many are receiving enhanced unemployment benefits, tax refunds, and other financial distributions from the federal government. The total amount is enough to save for emergencies or make stock and bond investments.

Considering the 2021 economy, it is clear that every investor should take advantage of more than one investment option. Every investor has their goals, investment styles, and ability to take risks. But the investment market is so vast that it may offer multiple options for each type of investor.

So, how can we make 2021 the best year for investments? Here we will discuss a few factors associated with this concept and decide your investment strategy for 2021.

Market Forecasts for 2021

Many experts predict that the global market can reclaim the investment market, despite the COVID-19 pandemic. The U.S. is expected to play a significant role.

For example - in its 2021 Global Market Outlook in January, JP Morgan Chase predicted that the S&P 500 would reach a record 4,400 points, increasing from 3,756 points at the end of 2020. It will be a significant increase of about 17%. They also predict that many individual investors would benefit as the stocks in the S&P 500 are widely held.

On the other hand, in its 2021 outlook report, Vanguard Investments revealed that U.S. equities would receive 3.7% and 5.7% returns for the next decade. For U.S. fixed income such as bonds, they expect limited returns of 0.75% to 1.75% during that time.

Vanguard is expecting higher returns of 7% to 9% for non-U.S. equities over the next decade. According to the investment research firm Morningstar, U.S. equities may receive potential returns in the coming years. They also predict that U.S. stocks won’t show any significant hike in 2021 as they did in 2019 and 2020. Instead, non-U.S. stocks have higher potential in coming years.

Investment strategies to make 2021 the best year ever

In 2021, you must choose the investment options based on your long-term financial goals, risk tolerance, and the time you expect to get returns. Here are a few tips to make this your best year for investing.

1. Have patience

Most investors are investing just because they need to achieve a goal within a fixed timeline. “Goals are what define the investment plan.”

As an investor, you may have specific investment goals in mind for 2021. These could include your kid’s education, paying off debts, buying a new car, repaying your mortgage, building a nest egg for a comfortable retirement, or anything else. For that reason, you need to set a time limit for getting a good return on investment (ROI).

Many investors put their funds towards several investment options to get their desired ROI. They wait for months, quarters, years, or even decades to get the final ROI. The goal is to get the desired return by investing your money and taking risks. This requires patience and focus on your investment goals, no matter how long it takes to achieve the best results.

Remember why you are investing, what you are investing for, and decide how much it is worth waiting for the final ROI.

2. Stay updated through media

Financial advisors and expert investors always keep themselves updated with the latest business news during the trading day. Investment is subject to market risks and requires sufficient knowledge of any investment you choose.

If you are interested in real estate investments, stay up to date on the latest news and trends in the real estate market. This concept also applies to other investment options.

But consuming too much business and political news can be harmful to an investor. Obsessively taking in information and reviews may cloud your judgment and create confusion when you make an investment decision. So, as an investor, you should get the latest tweets, broadcasts, and articles at a moderate level.

3. Maintain consistency

Review your budget regularly. It will help you decide how much to invest in any given situation. Consult an expert financial planner to determine how much you can afford to invest. Try to maintain consistency with your funds.

The stock market always experiences ups and downs, and things might seem difficult to handle. But don’t panic and don’t make any quick decisions. It may hurt your investments in the long run.

Keep your investments intact, no matter what happens. It will help you grow your nest egg well over time.

4. Analyze federal policies

It’s important to prioritize constraints over preferences when analyzing federal policies. President Joe Biden’s campaign platform was more focused on a preference for significant increases in taxes and spending. But Biden faced constraints with prioritizing it due to a Democratic majority in the Senate.

Other good examples of constraints may include Sen. Joe Manchin’s opposition to the removal of the filibuster and former President Donald Trump’s appointment of conservative judges. This will constrain President Biden’s ability to act through executive orders or regulatory mandates.

5. Take help and diversify

Seek help from a financial planner who can advise you on investments. Also, try different types of investment options that offer build-in assistance programs.

A good index fund provides diversity, like the S&P 500 index fund, which gives you a good ROI over time. It also diversifies your investment portfolio and provides a relatively low-risk option to invest in stocks. Some of the latest ones are given below:

• SPDR S&P 500 ETF Trust

• Vanguard S&P 500 ETF

• Schwab S&P 500 Index Fund

• Fidelity ZERO Large Cap Index

• iShares Core S&P 500 ETF

Now that you know the steps to successful investing, the question remains: where should you invest in 2021?

These are the best investments in 2021 according to risk level, ROI, and liquidity.

10 Best investment options for 2021

# Investment options Risk ROI Liquidity

1 High-yield savings accounts Low Low Easy

2 S&P 500 index funds Moderate Moderate/High Easy

3 Certificates of deposit Low Moderate Difficult

4 Real Estate Moderate Moderate Difficult

5 Rental housing Low Moderate Difficult

6 U.S. Treasuries Low Low Moderate

7 Treasury Inflation Protected Securities Low Low Easy

8 Short-term corporate bond funds Low Moderate Easy

9 Nasdaq-100 index fund Low Moderate Easy

10 Cryptocurrency High High Easy

Don’t forget to consult your financial advisor before investing your capital in any of these new investments.

About the Author: Lyle David Solomon is a licensed attorney in California. He has been affiliated with the law firms in California, Nevada, and Arizona since 1991. As the principal attorney of Oak View Law Group, he gives advice and writes articles to help people solve their debt problems.