No one could predict what happened in 2020, and no one knows what 2021 will bring. But what we can do is make educated predictions and forecast accordingly. My knowledge and study of the market trends tell me about some of the potentially best investments for 2021 which I would like to share.
The past year has been a roller coaster ride. Covid-19 pushed the economy towards recession, and the November US elections made the future unpredictable. Because of these reasons, I think investors are keenly and cautiously investing in 2021. With vaccines out and the Biden government making progress, I believe the future for the financial markets to be better than last year.
The Booming Housing Market
The housing market soared and surprised everyone during the pandemic. Many of the millennials took advantage of the record-low mortgage interest rates. As a result, existing-home sales reached the highest level in 14 years.
Low mortgage rates along with low supply and rising demand for housing pushed the housing prices upward. Moreover, buyers are expected to face the lowest supply situation during the current year. Therefore, housing is expected to be one of the most competitive markets this year.
According to Ramsey Solutions, the outlook for 2021 in the housing market is:
Housing Market Predictions | 2021 |
Existing home sales | Up 9% |
Newly built home sales | Up 21% |
Home prices | Up 8% |
Mortgage rates (30-year fixed) | At 3% |
On the other hand, when the economy stabilises, rates are expected to increase. This will eventually hurt the market and reduce demand.
But the above information makes housing an attractive sector to me. Therefore, it is on my list of the best investments for 2021.
Pharma Stocks: One Of My Best Investments For 2021
There has been a huge growth in the pharmaceutical industry in recent years, and the outlook continues to be positive for 2021. Team Linchpin predicts the sector to increase to $1.5 trillion by 2023. Therefore, Pharma Stocks are listed amongst the best investments of 2021 on my list.
Suppose the pharmaceutical industry manages to get the pandemic under control this year. In that case, I think these stocks will be sky-rocketing throughout 2021 and beyond. On the other hand, the counterfeit medicine market is an ongoing threat. This illegal use of brand names can damage the integrity of the companies producing the vaccines and can lead to major losses.
High Yield Bonds
High yield bonds give higher returns than Treasury Bonds. Of course, they come with higher risk. I believe the credibility of the high yield market is much higher now. Why? Because many big companies like Ford and Occidental Petroleum have seen their credit ratings lowered into the high-yield territory. But while these bonds are considered riskier, they are less exposed to the fluctuation in interest rates.
FAANG Stocks Are A Hit
FAANG is a Wall Street nickname for Facebook, Amazon, Apple, Netflix, and Alphabet(Google). According to Yahoo Finance, S&P ended the year 2020, with an all-time high with a 16% gain. The FAANG Stocks have outperformed this index.
Personally, I believe the bullish trend of FAANG stocks will continue in 2021. Therefore they are on my list of best investments for 2021
Best investments for 2021: Closing Thoughts
2020 has been an informative year for me. But after studying market trends, I believe that these could be the best investments for 2021 for my portfolio over the long term. Only time will tell if I am right.
But there is another stock I spotted that looks very promising…
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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.
