2020 was a year filled with uncertainty and restlessness. It was a year unlike any other. Investors were initially hit hard due to the ongoing spread of COVID-19, but most have since then recovered. Despite this, many remain hopeful and are eagerly awaiting 2021. In a few days, we will be turning a new chapter in our lives. We can only hope for a brighter and more fruitful year. Whether you are investing for a down payment on a house, afford your child’s education, or have money for retirement, the end of the year is the perfect time to consider doing so.
Investing is a complex subject to grasp, especially for those who are just starting their journey in the financial world. In short, an investment vehicle is a method in which you want to invest and grow your money. All investment vehicles have risks and benefits associated with them. Understanding the type of investment vehicle you want to pursue is essential to anticipating your outcome and planning for the future. There are many ways you can be a successful investor. Keep in mind your goals and budget to make an informed and profitable decision. After all, a knowledgeable buyer is a confident one.
The following investment vehicles are the foundation for your financial success in 2021.
With the uncertainty that loomed over 2020, it is understandable that you would like an investment vehicle that is less risky and more predictable. Although there are still risks associated, such as a bond going to default due to lack of payment, these are generally a much safer investments.
Types of bonds include treasury, United States government, investment-grade corporate, foreign, mortgage-backed, and municipal bonds.
If you are looking for a more stable investment that is less volatile and can provide steady returns, consider looking into bonds.
Mortgage-backed securities (MBS) are worth noting because the MBS market works in a similar way to bonds. Here, home loans are bundled together by a single lender, most likely a bank. The banks then partner with investors to finance these home loans and in return periodically pay investors.
Over the last 5 years, the total MBS market has steadily grown in the United States. MBS offers numerous benefits, including a solid rate of return, offer relatively low credit risk, and provide regular cash flow.
In 2020, both the world and the stock market experienced a rollercoaster of events. The last few days leading up to 2021 are no different. COVID-19 proved to be a hard hit for plenty of stocks, but also provided others with the opportunity to increase their numbers within a matter of months. At the height of the Coronavirus pandemic, e-commerce and streaming giants like Amazon and Netflix emerged victorious. Yet, companies like The Walt Disney Company stumbled for a bit due to statewide stay-at-home orders across the country.
However, now with the COVID-19 vaccine on the way to thousands around the world, the tables seem to have turned—proving once again how unpredictable the stock market can be. What does this mean for you? For starters, it emphasizes how much the stock market fluctuates constantly. This is something to take into account when you begin investing because of the risk involved. However, for those who are willing to take the chance, the opportunity for a high-return is likely.