Investment is a very important financial aspect that allows your money to work for you. Proper investment can give you a comfortable future as well as provide financial security for both the present and future. However, when it comes to investing, there are lots of options available. Every investment option has its upside and downside therefore, it is very important to understand all your options before you decide to invest your money. In this article, I will discuss some of the next big things to invest in 2021. So, if you are planning to invest money then you should check the information below!
Usually, the investment trends change every 2/3 years and new trends gain steam over the old trends. Some investment trends that might become the next big thing in 2021 are cash and commodities, Cryptocurrencies, medical technology, solar technology, bonds and securities, rental housing, real estate investment, etc.
Importance Of Investment
Proper investment can give you financial freedom. It is a great way to grow your wealth and get you out of a financial jam. It helps you meet your financial goals and increases your purchasing power. So, if you don’t invest then you are missing the opportunity to increase your financial worth. There are risks involved in investment but if you invest wisely then you can minimize the risk of investment. Some major reasons for investment are –
1. Grow your money
2. Save for retirement
3. Earn higher returns
4. Reach financial goals
5. Build on pre-tax dollars
6. Qualify for employer-matching programs
7. Start and expand a business
8. Support others
9. Reduce taxable income
10. Be part of a new venture
List Of 10 Best Investments In 2021
1. Cash and Commodities
2. High-yield Savings Accounts
3. Certificates of Deposit
4. Government Bond Funds
5. Short-term Corporate Bond Funds
6. The Stock Market
7. Municipal Bond Funds
8. Dividend Stock Funds
9. Rental Housing
10. Cryptocurrency
1. Cash And Commodities
If you are looking for a risk-free investment option then cash and commodities are the best options for you. Moreover, if you are new to investment then it will be a good place to start. However, you should understand that low-risk investments also generate low profits. You can invest in gold and other commodities such as silver or crude oil. Gold investment is an old investment type and its profit depends on external factors. If there are no political actions or environmental changes in the future then gold could be a good investment for you.
2. High-yield Savings Accounts
This is also a good investment option because a high-yield online savings account will give you dividends based on your cash balance. This type of saving account has various advantages and just like a savings account. A high-yield savings account is also an accessible vehicle for your cash. This type of saving account has fewer costs and higher interest rates. This is the best investment option for risk-averse investors and people who need money in the short term. The banks that offer high-yield savings accounts are FDIC-insured, so you don’t have to worry about losing your money.
3. Certificates Of Deposit
Certificates of deposit are also known as CDs and they are issued by banks. This is also a good investment option because banks offer a higher interest rate than savings accounts. These CDs are federally insured time deposits and they have specific maturity dates; it means you can’t withdraw money before the maturity dates. Usually, the duration of CDs ranges from several weeks to several years. If you invest in CDs then you will receive interest at regular intervals. When your deposit is matured then you will get your original principal back. This type of investment is safe but they have little reinvestment risk. When the interest rates fall you will earn less.
4. Government Bond Funds
The government also issues bond funds and they are known as mutual funds or ETFs. These are debt securities issued by the U.S. government and its agencies. So, if you want to invest in government bond funds then you can invest in T-bills, T-notes, T-bonds, and mortgage-backed securities issued by government-sponsored enterprises such as Fannie Mae and Freddie Mac. This type of investment is best for people who are looking for low-risk investments. However, Government Bond Funds are subject to risks like interest rate fluctuations and inflation. If inflation rises then purchasing power might decline. On the other hand, if interest rates rise, the price of existing bonds drops.
5. Short-term Corporate Bond Funds
If you want to get for interest than the government funds then Short-term Corporate Bond Funds will be the best option for you. Many corporations raise money by issuing bonds to investors. This type of bond is short term and they have an average maturity of one to five years. So, this type of investment is less susceptible to interest rate fluctuations and an excellent choice for investors who are looking for cash flow or want to minimize the overall portfolio risk. The only advantage of this type of bond fund is, they are not FDIC-insured.
6. The Stock Market
The stock market is a very popular [place for investors to invest money. Though investing in stocks is a bit risky but with greater risk comes greater profit. You can invest in a stock market index, or you can invest in individual stocks. When you buy a share of an individual company, you become a partial owner of that company. It means when the company makes money you yield profit. The more the company makes money the more profit you will make from your shares. When the price of a company’s stock goes up, your share’s value also increases and you can sell the share for a profit. But, you should understand that stock market investment is very risky. If the price of a company’s stock goes down the value of your investment will also go down.
7. Municipal Bond Funds
Municipal bond funds are issued by state and local governments. There are various municipal bond funds available where you can invest your money. This type of investment is risk-free and earned interest is usually free of federal income taxes as well as exempt from state and local taxes, too. If you are living in high tax states then it will be a great investment option for you. You can buy the Municipal bond funds individually, through a mutual fund or an exchange-traded fund. This type of investment is good for beginning investors who are looking for risk-free cash flow.
8. Dividend Stock Funds
If you find the stock market risky then you can consider investing in stocks that pay dividends. This type of investment is best for any type of investor but can be better for those who are looking for income. Dividends are portions of a company’s profit and they are distributed to shareholders, usually every quarter. Like any other stock investment, dividend stock funds also have risks. However, they are safer than growth stocks or other non-dividend stocks.
9. Rental Housing
Rental housing can be the next big thing where you can invest your money. If you can manage your own property then you can easily invest in rental housing. Recently, the mortgage rates are sitting at all-time lows which makes it the best time to invest in this sector. If you want to invest in this sector, then you have to be very selective. You have to find the right property, finance it or buy it outright, maintain it and deal with tenants. If you are looking for long-term investment then rental housing is a great option for you.
10. Cryptocurrency
Over the years, the popularity of cryptocurrency has increased a lot and therefore many people are showing interest to invest in Cryptocurrency. Cryptocurrency is a kind of digital electronic-only currency where Bitcoin is leading from the front. Bitcoin has become a hot property in the last few years in particular and it has been pushing up prices and drawing even more people to invest in cryptocurrency. If you are ok with risks while investing then you can invest in Bitcoin and other cryptocurrencies. The price of cryptocurrencies is very volatile and you can lose lots of money in a blink of an eye. However, cryptocurrencies have the potential of much higher returns so it’s totally up to you to invest in Cryptocurrency.
Final Thought
People who have a mission and vision in their life invest money to make a strong future. So, if you decide to invest then you can consider any of the above ideas because they might be the next big thing for investment. However, while investing make sure you consider the risk tolerance, time horizon, knowledge of investing, and financial situation to make your investment as risk-free as possible.
References:
1. https://time.com/nextadvisor/investing/best-investments/
2. https://www.cnbc.com/2021/12/22/22-ways-to-save-invest-and-get-smarter-with-money-in-2022.html
Last Updated on February 9, 2022 by
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.
