Three Investment Avenues To Watch Out For In 2021

Tuesday, 5 January 2021, 5:20 pm
Article: Kalkine

Summary

• This is the right time for investors to ascertain their best-suited investment avenues to wade through financial market uncertainty in 2021.
• Cryptocurrency, electric vehicles, and commodities are some promising investment themes holding great potential to deliver lucrative returns in the coming year.
• Investors should choose an investment avenue based on their individual risk appetite and financial goals to evade potential losses.

Undoubtedly, 2020 has been one of the most transformative years of the 21st century so far. The tumultuous year will be remembered as the time of COVID-19 era. Despite all the economic and health woes, the year was most captivating when we look at certain smart investment decisions.

Notably, the yellow metal managed to steal the limelight with its exponential price surge during the year. At the same time, equity markets left market participants stunned with the sharp transition from the bear to bull market last year.

As the world makes an entry into 2021 with a blend of vaccine hopes and new virus strain fears, it seems imperative for investors to ascertain their best-fit investment avenues. Identifying these investment opportunities beforehand can help investors ride out bouts of volatility in the coming year.

With that said, let us acquaint you with three promising investment options that can potentially deliver sky-high returns in 2021:

Cryptocurrency: The Booming Trend

The coronavirus era saw the world going crypto crazy. Bitcoin staged a robust comeback, while several companies were seen to be hopping on the crypto bandwagon.

The beloved cryptocurrency quadrupled in value during 2020, breaking through USD 30k mark for the first time in 2021. Besides Bitcoin, Ethereum also posted a considerable gain of 450 per cent in 2020, adding fuel to the crypto fire.

Cryptocurrencies’ unprecedented price run was primarily driven by investors’ rush for safe-havens amidst COVID-driven uncertainty. Besides, the acceptance of Bitcoin as a payment method by online payment major PayPal propelled crypto mania in 2020.

With Bitcoin smashing all records and becoming more mainstream, investors seem to have a golden opportunity to capture the crypto momentum and make hefty profits. However, market corrections, like 17% observed recently in Bitcoin, need to be carefully gauged given the elevated risk levels and the luck factor driving fortunes in crypto space.

EV Space: The New Craze

Electric vehicles or EVs remained one of the hottest topics in 2020, with EV stocks taking the stock market by storm.

The leading EV player Tesla Inc.’s share price surged by over 740 per cent in 2020, with its market cap surpassing beyond USD 600 billion. Interestingly, the US automaker delivered a record number of EVs to customers in 2020 – 4,99,550 vehicles – amid the rising popularity of EVs in the automobile market.

The EV space garnered considerable attention following Joe Biden’s victory in the US election. The new regime is expected to accelerate the automobile market’s shift to EVs. Mr Biden intends to promote the swift adoption of green energy technology to reduce greenhouse gas emissions in the US. No doubt, EVs can play a crucial role in meeting this objective.

Additionally, a gradual shift of consumer attitude towards environment-friendly alternatives has been keeping the EV space in the spotlight.

NZ investors evaluating this fascinating space can take exposure to EV ETFs like ETFS Battery Tech & Lithium ETF that focusses on energy storage and production firms. Investors can gain exposure to several companies in the EV space through such ETFs, potentially benefitting from escalating sales of electric cars.

Kiwi Investors taking exposure to EV ETFs need to conduct thorough due diligence on such ETF products before placing any trades on them. Investigating the components of such funds while accessing their responsiveness to varied market conditions appear extremely important.

Commodities: Back in Fashion

The COVID-driven headwinds initially wreaked havoc in the commodities space with oil price meltdown in March last year. However, recovering demand and policymakers’ massive stimulus packages stimulated robust recovery in the commodity space by the end of 2020.

Gold and silver continued to shine almost throughout the year amidst investors flee towards safe havens. While copper, iron ore and steel zoomed up during late 2020. Burgeoning demand for metals in China in the post-COVID scenario majorly triggered the rebound in commodity space.

Experts anticipate a further uptick in demand for commodities in 2021 amid recouping global economic growth and COVID-19 vaccine rollouts.

Given the promising trend in commodities space, investors may cautiously park some chunk of funds in precious and industrial metals or the related businesses. However, it is imperative to undertake prudent analysis of these commodities in line with their risk profile and return expectations.

Bottom Line

While these investment options hold significant potential to deliver unmatched returns in 2021, investors need not neglect their risk-taking capacity before choosing an avenue. Evaluating parameters like time horizon, investment risks, liquidity, costs, and convenience seems crucial to make this choice.

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