Are you here for the best investments for 2021? Let’s be clear: there is no such thing as a “best investment,” at least not in the strict sense of the word. It is only by studying your current situation, taking the time to write down your goals, and reflect on your financial hopes that you will know what type of investment you need to make. To serve this very purpose, this guide, “5 best investment ideas in 2021,” will help you see how to benefit from these investments as intelligently as possible.
With the complexity, if not the diversity of investment possibilities these days, making the right investment choice becomes more and more difficult. Thus, all potential investors embark on a permanent search for the best investment, offering the best return rate with the least risk. Investing with little money and profitable returns is the desire of every investor. There are a few investments that are a little more beneficial than others. However, you should know that the success of any investment undoubtedly depends on each investor’s objectives and his situation. Therefore, no investment is more advantageous than the other. Without further ado, let’s jump straight into the best investments for 2021:
Best Investments For 2021
1. Stock Trading
There are many ways to invest in the stock market. The best known are the purchase of stocks and bonds. Equity investment involves a company’s shares, which are the title of the property. Owning stock is like owning a share in the business. To make a return with stocks, you have two possibilities: receive the dividends that the company pays you (as a shareholder); sell the shares more expensive than you bought them (these are the capital gains). The performance of the shares is 6% to 10% per year.
Although they can be quite profitable, stock market trading can also, in some cases, be the source of great disappointments. Depending on their skills, experience, and the transaction system they choose, many professional traders manage to achieve significant profits every year. If you want to do the same, it is essential to do it in the best possible way. To do this, we provide you in this article with information on the attitudes to adopt when trading shares on the stock market.
The stock market is a formal market in which the securities of a company, primarily equity, are traded. It exists to allow many investors to sell or buy shares. It also offers the opportunity for companies to raise funds through the issuance of new shares. The list of the most famous markets is as follows:
- The New York Stock Exchange where stocks can be traded, including Ford, the Citigroup banking group, and Boeing;
- The London Stock Exchange where one can buy and sell shares in Unilever, HSBC, and BP;
- The Frankfurt Stock Exchange, where the shares of the largest manufacturers such as BMW, Thyssen Krupp, or Daimler are traded.
How To Learn Stock Investing?
One of the best ways to trade stocks is to hire an experienced and knowledgeable professional; this saves you the trouble of finding a stockbroker. If you want to carry out your various transactions yourself, know that you can find many sites online to help you carry out your transactions. By giving a stock market order, you can also buy or sell a stock on the stock market. This solution allows you to carry out a stock market transaction at the best price. You can also opt for the use of a trailing order, which has an upper or lower limit depending on which a share must be bought or sold.
However, instead of remaining fixed, the price at this level is shown as a percentage. Since it greatly limits the various risks associated with the volatility of the different prices, this solution offers specific security to the investor. It is also essential to provide reasonable prices for both purchase and resale to carry out good transactions. If the proposals you make are unrealistic, you will have many difficulties both when buying and selling shares, thus being reasonable is essential. Knowing the market and being consistent is vital.
2. Cryptocurrency
Buy, trade, mine, staking cryptocurrencies; what are the various possibilities for making money with cryptocurrencies? The increasingly important diffusion of cryptocurrencies today offers a wide range of options to try to make money with virtual currencies, making it one of the best investments for 2021.
Different Ways To Earn Cryptocurrency
- To buy and sell cryptocurrency, there are platforms like Binance, Coinbase, BitPanda, Coinhouse, Kraken, etc. This is usually the best way to invest for the medium to long term.
- There are various possibilities for trading cryptocurrencies through derivatives. The most common derivatives on cryptocurrencies are CFDs which reproduce the variation of the corresponding cryptocurrency. Many stock market brokers offer the possibility of virtual trading currencies via CFDs, which are (very) short-term products with a high risk of capital loss and require in-depth knowledge of the financial markets.
- Mining cryptocurrencies remains a complex process. The miner’s goal is to make his computer equipment available to secure users of cryptocurrencies. To validate his participation in the network, a miner must prove work by solving a mathematical problem. Solving the problem allows you to find a “hash” (code made up of letters and numbers), which validates the transaction.
- Staking is a growing practice. Staking consists of locking part of your wallet in cryptocurrencies to receive rewards (most often interest). The central objective of staking is to allow better security of the exchange network and reduce Blockchain energy consumption. The interest offered can sometimes seem high, and it is often better to learn about the seriousness of the project to avoid a sharp drop in the price of blocked cryptocurrencies.
3. Real Estate
Talking about the best investments for 2021, if you are looking for a profitable and secure investment to build up your assets and ensure your future and that of your loved ones, real estate investment appears to be the most suitable solution. Unlike stock market investments, real estate investment is less impacted by economic conditions.
Unless exceptional circumstances are encountered (radical change in the property’s environment, significant deterioration of the building, etc.), it is rare to see a property depreciate in the medium or long term, quite the contrary.
With a real estate investment, you benefit from the leverage effect of credit, especially if you plan to rent your home! Thus, it can be partially or totally reimbursed by the rents collected, especially since the rental investment offers a good return, which can go up to 7% according to the estimates of market players. The leverage effect of credit and the various tax advantages associated with leasing allow you to build up wealth without making significant savings efforts. Also more secure than financial products listed on the stock exchange, real estate investment has a more attractive return on investment than that of savings products.
Rental Or Commercial Real Estate?
Rental Real estate isn’t the only best investment for 2021, as commercial real estate offers better yield and flexibility. Up to twice as profitable, commercial real estate can offer profitability ranging from 5 to 7% compared to only 2 to 4% in rental residential real estate. The flexibility of the commercial lease is more important, and recourse is facilitated in unpaid rents. Investing in commercial real estate is specific. Prices are not calculated in the same way as for housing. The most favorable locations are located on the main shopping streets, squares.
Commercial premises exposed on the sunnier side of the street will sell for more, offering better yield and greater demand. If your location is sought after by traders, you will also more easily re-let the property and the capital gain is likely to be significant. The only downside is that the profitability can be lower for the simple reason of lower risk; the return is lower. This rule applies to any investment: profitability remunerates risk.
4. Investing In Currency
The value of currencies constantly increases or decreases against the euro. Generally, this value is expressed in several foreign currencies received for 1 US dollar. For example, 1 euro to 1.2 USD.
An investment in a foreign currency may have a higher return. Alongside the return on the product itself, it may again make it following the favorable evolution of the currency exchange rate. Investing in foreign currencies, therefore, induces additional risk-taking. If the exchange rate of the currency drops against the dollar, you are indeed losing money. However, trading currencies can start with low capital investments. Investing in foreign currencies also allows you to diversify your investments. If you make all your investments in the same currency, your entire portfolio suffers if there is a problem with the currency in question.
Main Investment Currencies
- US dollar (USD)
- Japanese yen (JPY)
- British pound (GBP)
- Swiss franc (CHF)
- Norwegian krone (NOK)
- Swedish krona (SEK)
How To Invest In Foreign Currency?
- A term account in foreign currencies: With most banks, you can open a term account in major foreign currencies. If you put money in a term account, you can also earn interest.
- Foreign currency bonds: Corporate bonds issued in many different currencies are available from most banks. The yield of this type of bond depends on the interest earned by the bond and the change in the value of the currency.
- Currency shares: When buying a share in a currency, your return will depend on the evolution of the share price and the growth of the currency’s value.
- Foreign currency investment funds: As with equities, your return will depend on the evolution of the fund’s price and the evolution of the currency value.
5. Corporate Bond Funds
Another one of the best investments for 2021 is bonds. Bonds are a medium / long-term investment. The corporate bond is a coupon issued by a company that wants to raise funds from private investors:
If you get one of these bonds, you’ll earn annual interest, and your invested capital will come back to you at the end of the bond’s life. This is a low-risk investment because it is not dependent on the performance of the company.
Investors (bondholders) can make money in two ways.
- First, as we have already mentioned, the holder receives interest payments – called coupons – over the life of a bond. For example, if you bought a 10-year bond with an 8% coupon, the issuer would send you a coupon (interest) payment of $ 80 each year. Most bonds pay twice a year, so technically, you get two checks for $ 40 each.
- Second, bond prices fluctuate in a similar way to any other security. This price fluctuation depends on several factors, the most important of which is the market interest rate. Investors try to profit from changes in the price of a bond by guessing the trend in the interest rates.
Some bonds are only accessible to professional investment funds, while others can be traded on the secondary market (supply and demand). An individual can therefore acquire corporate bonds on a dedicated secondary market.
The value of government and corporate bonds increases when the rate at which they can borrow in bond markets decreases. When a bond is at a fixed rate, the coupons paid are constant, but its value varies according to the evolution of interest rates. Indeed, when interest rates rise, new bonds are issued with higher coupons than old ones. Therefore, the latter’s value begins to decline as investors sell them to buy those that bring in more. Conversely, when interest rates fall, the price of fixed-rate bonds already in circulation goes up. It is, therefore, possible that an investor will lose part of his investment if he sells his fixed-rate bond before its maturity and while interest rates have risen since his investment.
Conclusion
As we have seen in this article, there are many options for investing and the different financial markets to invest your money. Everyone can therefore find their best investments for 2021. However, not all investments are suitable for all investor profiles. You must, therefore, first of all, take stock of your objectives. Are you willing to take risks for a high return, or do you prefer security? Do you want to invest for the long term or short term? How much capital do you have to invest this year? By answering all these questions and the information and advice in this guide, you will easily find the investment that suits you best, depending on your expectations and personal situation.
2021 should normally be a great year of growth and global recovery, particularly on the stock market. Know how to take advantage of these new growing markets by positioning yourself. Approach the end of a cycle and the birth of a new one with pragmatism and positivism. It’s a safe bet that the coming decade will be a pledge of growth and value creation. It is up to you to take advantage of it.
