2021 is here and the markets have reopened. Stocks rallied in 2020, despite America facing one of its worst economic crises in history. This year investors can look forward to the widespread availability of Coronavirus Vaccines and a slow but steady recovery in jobs and household income.
You can make the most of your investment money in the new year with three essential tips.
Assess Financial Goals
Consider your goals as you begin investing in the new year. With your goals clearly laid out, you’ll be able to make smarter and more focused investment decisions. Consider a reasonable rate of return, long-term targets for savings or large purchases (like cars, property, etc.), and how much you are willing to spend each month to grow your investment portfolio.
Diversify More in 2021
2020 was proof that diversity matters in the stock market. The best-performing picks were spread across diverse industries ranging from technology and automotive to finance and healthcare. Diversifying a portfolio can be complicated, especially if you don’t have a lot of time to micromanage individual stocks.
If you want to diversify with the least amount of time invested, you can look at exchange-traded funds that are industry-focused. These can help to add more exposure to your portfolio at reasonable costs.
To leverage the entire market in a single pick, consider the iShares Core S&P Total U.S. Stock Market ETF (NYSE ARCA: ITOT). This fund aims to create returns consistent with growth in the S&P 500 index.
Savings can create a safety net and help you to achieve long-term financial goals or make large purchases. For long-term savings, consider Certificates of Deposit (CD). These help you to grow your money safely at fixed rates so you’ll know the exact return you will generate at the end of the investment term.
All major banks and larger financial institutions offer CD accounts with relatively low initial deposits.
Discover® Bank, an FDIC insured bank, offers some of the best returns today with terms ranging from as short as three months, all the way up to ten years. CD accounts can offset volatility in stocks and other investments, and they’re particularly useful for investors who find it hard to stay disciplined with their surplus investment dollars.
2021 Will Be a Year of Strong Opportunities
Markets finished on a high in 2020. This year will bring fresh opportunities and a more stable global economy. With much of the uncertainty removed, investors can focus on recovery and growth.
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