There’s plenty to occupy investors’ minds as we plough through 2021.
We are beginning to find out about life after Brexit; a new US president has entered the US White House. Chinese manufacturing appears to be on the up. And we have a vaccine to combat the spread of the coronavirus.
Behind all this, investors could see a move from growth to value companies.
Could 2021 finally be where this is more evident for investors?
After all, since 2007, growth stocks have significantly outperformed value ones.
Plus, the size of the outperformance is much greater too. Yet, there is a straightforward case to be made that growth is here to remain.
High-quality growth stocks have remained significantly important to investors over the past ten years as they search for shares amongst the world’s most prominent corporations.
These same stocks continued to grow despite the market volatility as government lockdowns were enforced due to the COVID-19 pandemic.
For instance, Apple became the US’s first company to achieve a two trillion-dollar valuation on August’s stock market. It took Apple only two years to double its valuation from $1 trillion.
Before then, it took 42 years for Apple Computers to hit the trillion-dollar mark in August 2018. Despite the uncertainty surrounding the markets due to the pandemic, even more will need to occur to disrupt these corporate behemoths’ momentum.
2020 has been a year to forget if you sought colossal stock market gains.
Should economic growth rise again, accompanied by a rise in bond yields and inflation expectations, the environment would look more encouraging for investors.
Finding a vaccine for COVID-19 could provide the impetus to kickstart the global economy and provide value investors opportunities.
Increased fiscal stimulus should be likely to continue. Governments worldwide have already pumped more money into their economies to take the brunt of the pandemic.
Typically, these stimuli have eased the initial economic impact of the pandemic.
Because of Joe Biden’s US election, we’ve witnessed the implementation of his economic stimulus.
Added with the high hopes for the vaccine rollout, investors in the USA are betting on a US recovery that will make long-term bond yields grow.
Long-term bond yields have been regularly decreasing for several years, making resilient growth companies look all that more appealing.
Betting on rising yields looks like an attractive investment for value investors.
Furthermore, if economic growth rises, it will likely cause a rise in interest rates. Should this occur, growth stocks could become less attractive.
Of course, all this is merely speculation; we cannot know for sure what will occur in the remainder of 2021.
Keeping all your eggs in one basket should never be a mainstay of investing. And keeping them in growth stocks is one way to increase the volatility of your portfolio.
Diversifying to other investments, particularly alternative ones, ensures investors stand to benefit from the upsides whilst being protected against the downsides.
Time to consider alternative ways to invest in 2021?
There are a variety of alternative investments you can try. Like most investments, knowing what to buy and how long to hold onto it is key to making a return.
Invest in property
Real-estate investments have always been considered dependable. Most people start investing like this with their first home.
Since property prices usually increase over time, they can then flip their home for a profit or rent it out for an added income as they move to their next home.
We all know or have heard of someone who has made millions from property investments. These investments can also include farmland, office, and retail spaces.
Land and properties have always offered secure investment opportunities because it continues to be in demand as the population increases.
As with all other investments, you need to know what you are doing, so take the time to learn more about real estate investments.
Suppose you don’t want to own property but still want to get involved in real estate. In that case, crowdfunding allows you to invest without worrying about understanding how real estate works.
Invest in precious metals
Precious metals are popular alternative investments. There are two ways to invest in precious metals.
Firstly, you can buy bullion or coins. Even though gold offers no dividends, it retains its store value, and its 20-year price has gone from below $500 per ounce to $1,899.
Its price does fluctuate, but it has grown steadily.
You can also invest in precious metals through mutual funds that invest in mining companies, thus removing the problem of where to store your gold.
Invest in P2P lending
Peer-to-peer lending is where you lend money to another person for their business.
You can do this through a platform that will connect you to companies looking for venture capital, or you can loan it privately.
You get a return for your money depending on the interest rate that has been agreed upon.
Invest in cryptocurrencies
Cryptocurrencies have become one of the top alternative investments, and you can start by investing in small amounts.
Important to note is that investing in cryptocurrencies are a volatile investment vehicle. Primarily because they are not regulated, but they can be a fun way to invest.
Fine wines followed closely, with vintage cars, coins and jewellery all producing good returns over the past decade.
These investments require significant financial sums and an acute understanding to make a profit.
For more alternative investment ideas, you can read our article on it here.