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At Florence, we have noticed that people often mind investments, and the questions around it daunting and overwhelming. Moreover, the financial uncertainty that defined 2020 has left investors wary and skeptical about where to invest in the new year. We have compiled a list of investments that we think you should consider for increasing your income in 2021.
Equities:
Investments in equities have been increasing with the prospect of a vaccine for Covid-19 in the past few months. The increase has also been brought about by a rise in liquidity. The best way to invest in equities is to time the market and diversify your investments across large, mid, and small-cap funds.
Overseas stocks:
Diversifying in overseas stocks is always a great idea. In case this will be your first overseas investment, it is advisable to invest through domestic houses. It is always advisable to read up and research the difference in international equity funds before you invest.
For greater benefit, another important factor to keep in mind while investing overseas is geographical location. While it is tempting to fall for past returns, the US is not the only country where you can invest and it is important to do your research well about other places with high returns. The most risk-free percentage to start investing with is 10 percent of your assets.
Bonds:
Good quality bonds have delivered well this year, with corporate bond funds at a 9.66 percent return, while banking and PSU bond funds had a 9.6 percent return as per Value Research. However, the do not fall for past returns gospel holds true here as well. There are predictions that yield may rise in 2021 and this makes it all the more vital to do thorough research before investing in bonds. Remember the algorithm: interest rates rise, bond prices fall.
Gold:
When has gold ever been considered a bad investment? The answer is never! Prices of gold have been rising at a staggering 26.8 percent since the past year. While it is true that at the beginning of the end of the pandemic with the arrival of Covid-19 vaccine has had a little bit of an effect on the investment returns of gold, the shiny metal still remains a top investment for 2021 as the economic recovery has been predicted across the globe.
While investing in gold, diversification is key to save you from inflation while also ensuring that you generate high returns. Once again, the ideal asset value to start with your gold investment is 10 percent of your portfolio. This can be a mix of gold exchange-traded funds, gold saving funds, or sovereign gold bonds.
On a concluding note, we recommend our readers to invest across assets but also maintain a balance in 2021. Reading up and researching is important to prevent you from going down the rabbit hole of past returns. Moreover, over-investing in one asset and under-investing in another can be detrimental. The best way to invest in 2021 is to ignore market noise and invest smartly.
