Chris James

Best Investment Choices For Building a Nest Egg for Your Kid’s Future

There are many reasons why people invest. They may be growing their money to have enough for a major purchase like a house, car, or vacation. They may be saving up for retirement, or they may want to have enough to pay for their kid’s education and get them off to a good start when they are ready to move on.

If you are thinking about investing in your child’s future, there are a variety of options to choose from. Here are some to consider.

529 College Savings Plan

College is expensive! Building up savings early can prevent families from shelling out excessive tuition fees all at once.

There are many ways to save for college, but a 529 plan is one of the most common.

529’s come in the form of education savings plans and prepaid tuition plans.

529 education savings plans are similar to Roth IRA’s in structure. Depending on your plan, you may be able to choose from mutual funds, target-date funds, and exchange-traded funds.

The money you invest in a 529 has already been taxed and earnings are not subject to tax when they are used to pay for qualifying expenses. When you take the money out to pay for your child’s education, you won’t be charged federal tax income on the withdrawal but may incur state taxes.

Prepaid tuition plans let you lock in the price of your child’s education at today’s rates. You can pay the tuition in a lump sum or in installment payments. The money you invest can be used to pay your child’s tuition at a qualifying college.

Other Investment Accounts for Kids

529’s are specifically for college, but there are other types of investment accounts that can be used to save up money for your child’s future. These can be used for education or to build a nest egg for them when they are ready to move on. Here are a few to consider.

Custodial IRA

Custodial IRA options include traditional and Roth IRA’s. They are designed to provide money for children to use when they retire. They allow you to invest money in stocks bonds and other securities. They differ in when you pay taxes on contributions.

A Roth IRA allows your child to make tax-free withdrawals on all earnings upon retirement. If they withdraw the money before they reach the age of 59, they will incur a 10% penalty.

A traditional IRA is tax-deductible and will help your child reduce taxable income.

The Roth option typically provides more benefits. However, if your child has a job with a 401(k), the traditional IRA will be beneficial in reducing taxable income.

You will be the custodian of the account until your child is 18. Once they become an adult, the account can switch hands. Parents will want to persuade their child to leave the money in the account so it can gain compound interest.

Brokerage Account

Like IRA’s brokerage accounts allow people to invest in stocks, bonds, mutual funds, and other securities. They offer tax advantages and can pay dividends depending on the stock portfolio. You can open the account on your child’s behalf and transfer it to them when they are 18 under the Uniform Gift to Minors Act or Uniform Transfer to Minors Act.

There are several brokers that offer brokerage accounts and it’s advisable to find one that doesn’t charge fees or require account minimums. Some also offer tools to young investors so they can hone their trading skills using practice accounts. Brokers may also offer courses and resources to increase your child’s financial literacy.

CD Ladder

CD ladders are a reliable investment choice. They are certificates of deposit that allow you to purchase multiple CDs at once. You can invest in CDs with different maturation ranges and interest rates. When the CD matures, you can roll the money into another CD to increase your investment.

Ladders are a safe option for investors. When interest rates increase, your child will have more money to invest. If interest rates go down, long-term CDs will rise in value.

The money in a CD ladder is available to your child at any time and tends to do best when invested long term.

Life Insurance Plans for Kids

Life insurance is another great investment you can make for your child.

When a child is young, there is little chance that they will incur any serious health conditions. Therefore, rates are low. Once you lock in a low rate, it will remain low for the duration of the policy.

Additionally, you or your child will be able to use the money if a health condition develops later in life.

Life insurance policies are also beneficial because they have cash value. When you buy a policy for your child, a large portion of the premium will go toward building cash value. This is because the cost of insurance is low and there’s more time for the money to build.

The cash you build-up can be accessed for any reason. However, a withdrawal may lead to a large tax bill and will reduce the death benefit.

Conclusion

As a parent, you will want to take steps to ensure your child has a comfortable future. Making the right investments can help. A 529 will build funds for college while custodial IRAs, brokerage, and CD ladder accounts can be used for any of your kids’ future needs. Life insurance provides coverage if the worst happens and builds cash value.

Which do you feel is best suited to your family’s needs?

What do you plan to do when you retire? Live in the country? Travel the world? Sit back and enjoy a life of leisure? The investment choices you make now will help you grow your wealth quicker so you can enjoy a higher quality of life when you are ready to leave the working world behind.

If you are currently planning your retirement, here are some tips that will help you make your money work for you.

Best Retirement Plans for 2021

If you are thinking of opening a retirement plan this year, here are some things you will want to consider.

Defined Contribution (DC) Plans

DC plans are the most popular type of retirement plan. These are plans that are offered by companies to employees. The 401(k) plan is offered in most companies while the 403(b) plan is offered to public schools and tax-exempt organizations. The 457(b) plan is available for state and local employees.

Many DC plans offer Roth versions that allow you to use tax dollars to contribute but money can be taken out tax-free at retirement.

IRA Plans

IRA plans were created by the U.S. government to help workers save for retirement. In 2021, workers under 50 can contribute up to $6000 into an account; workers over 50 can contribute up to $7000.

There are several types of IRA’s to choose from including traditional IRA’s, Roth IRA’s spousal, IRA’s rollover IRA’s, and SIMPLE IRA. Choose the one that’s best for you based on your work situation and the tax benefits each offer.

Pensions

Pensions or defined benefit plans are funded by employers and provide a fixed monthly benefit payment to workers once they retire. They are payable for life and are based on tenure and salary. They are usually determined using a formula that calculates 1.5% of your average compensation and multiplies it by your years employed.

Although these plans are convenient for workers, they are becoming phased out because many companies are unsure whether they will be able to make good promises of hefty payouts so far in the future.

Profit-Sharing

Some companies offer a profit-sharing plan. This works as a win-win because it is in a worker’s best interest to be productive and help the company to grow.

Workers benefit by making money and they do not need to contribute to the plan.

One drawback to profit sharing is that the employer is not required to contribute every year. However, the government steps in to ensure contributions are recurring and substantial.

Company Matches

If the company you work for offers a retirement account, they may include a company match in the package. However, you will need to make a minimum contribution to take advantage of this perk.

For example, the company policy may be to match up to 5%. This means that the employee must contribute at least 5% of the account total to get the full match amount. If the employee defers 3% of his or her salary, the company will match 3%. If they defer 2%, they will get a 2% match.

Deferments of over 5% will only be matched to 5%. However, employees may still want to contribute more to their plans. In fact, experts recommend that workers defer 10–15% of their salaries to their retirement plans. However, if they can’t afford to do so, they should still attempt to contribute enough to get the full company match.

Employees should be aware that they won’t have access to their money immediately. The employer contribution can’t be touched until the money is withdrawn from the account. Most accounts will not allow workers to withdraw money without penalties until they are at least 59 ½ years old.

The employee match will also be contingent on the company’s vesting schedule. For instance, if the company has a five-year vesting schedule, this means that the employee must be working there five years to receive the full amount of the match. However, the employee’s contributions will be vested from the time they open the account.

Getting the Most of Your Social Security

Your social security will play a huge role in determining how much you can live on once you retire. Creating an account with the Social Security Administration can be beneficial in several ways.

If you set up an account, no one else can set one up under your name. This will protect you from fraud or breach.

It will also allow you to see an estimate of your future benefits so you can figure out your best strategies when claiming. If you claim early, you may not get the full amount owed. Wait until retirement age and you will get the amount in your full account. If you wait until you are 70, you will get even more.

Creating an account will let you make sure the information the government has on file is accurate. This includes your wage history and lifetime earnings. Confirming this data will ensure that you are getting the amount you deserve when you are ready to cash out.

Accounts can be created on the social security website. You must be at least 18 years old and have a social security number and valid U.S. address to be eligible.

Conclusion

It’s important to save money for retirement. Without work income coming in, the money you invest today will be what you will be living on in your senior years.

Investing in the right plans, making sure to get optimal company matches, and opening a social security account are wise moves to make when it comes to planning for your future. Which of these will you do to make sure you have enough for that house in the country?

Cryptocurrency is the way of the future. There are many types of these digital assets, but Bitcoin may be the most well-known of the bunch.

Bitcoin was invented in 2008 and went into use in 2009 when the software was released to allow for its implementation. It has been one of the most in-demand cryptocurrencies due to its limited supply status. Only 21 million can be mined in total.

As a result, Bitcoin has soared in value and experts were predicting that one coin could be worth as much as $400,000 by 2025. But it’s been a rocky ride and new legislation in the Biden administration may be changing all that.

This article will provide insight as to what we’re looking at so far.

Predictions at the Beginning of the Year

In March of 2021, things were looking bright for Bitcoin. A month earlier, Bitcoin Magazine released a report based on the stock to flow ratio that accurately predicted Bitcoin going from a valuation of $4,000 in March of 2019 to grow to $50,000 in February 2021.

The magazine used those same measures to make predictions for the future and found that a $400,000 valuation for 2025 did not seem at all outlandish. In fact, just a month later, in March of 2021, the prices soared to $60,000.

Bitcoin’s growth is in part due to the Bitcoin subsidy. The subsidy is predicted to halve Bitcoin’s availability every four years causing it to increase in value and quality as a deflationary asset. This is one reason why it does well in a bullish market.

Its increase in value also owes to the fact that it is embraced by several mainstream corporate entities and investment firms as a reserve asset.

Bitcoin Crisis

Bitcoin has been growing in leaps and bounds, then it all came to a crashing halt. Many cryptocurrencies, including Bitcoin, dipped well below predictions due to President Joe Biden proposing a capital gains hike. The president is seeking to raise taxes on millionaire investors to overhaul the economy to fund education and other priority expenses.

This announcement led to a selling frenzy and Bitcoin dropped 4.3% valuing at less than $50,000 for the first time since March. According to Coin Metrics data, it was down to $49,730.

Other cryptocurrencies followed suit. Ether fell to $2320, down 8% and XRP fell 16%. This is part of what accounted for a $200 billion dollar loss for the entire cryptocurrency market.

Biden is proposing to raise capital gains tax for millionaires to 43.4% including a surtax. The hike would apply to returns on assets held in taxable accounts sold after one year. It would top the highest federal tax rate on wage income.

While many investors responded by going into panic mode and pulling out their money, some experts say it could be a valuable lesson for some individuals teaching them to borrow against their assets to avoid capital gains.

Bitcoin’s Price History

Although investors were shocked by the recent dip, if you look back in Bitcoin’s history, you will find that its volatility is nothing new.

For instance, in 2011, it jumped from being worth $1 to be worth $32 in the middle of the year. By the end of the year, it bottomed out at $2.

In 2013, it started off the year at $13.40, then rose to $220 and fell again to $70 in mid-April. In October it rose to $123.20 and topped off at $1156.10 by December but it fell just a few days later ending the year at $760.

There are many factors that affect Bitcoin prices. Regulatory developments play a significant role with values increasing or decreasing every time a development is announced.

The aforementioned interest from institutional investors must also be considered. In the past few years, Bitcoin has become less favored by retail investors and is a more attractive asset for institutional investors. This is a favorable condition as it encourages liquidity and stability.

Industry developments also come into play. These often occur in tech and finance spaces both of which hold a keen interest in cryptocurrency. Announcements of futures trading at the Chicago Mercantile Exchange and Cboe options exchange are noted as being responsible for a spike in price.

Economic stability also leads to price fluctuations. While you might think prices would fall during unstable times, they tend to rise. This is due to Bitcoin positioning itself as a hedge against financial uncertainty.

Conclusion

Bitcoin was on a positive trajectory at the beginning of the year. It all came crashing down when President Biden announced a possible capital gains hike.

Although cryptocurrency has gone up and down in value in the past, these are unique circumstances. However, it’s important to consider that the President’s proposed legislation has not gone into effect yet. Furthermore, the lower prices will drive purchases for smaller players that may help the market to grow overall.

It’s a wait-and-see situation and we are crossing our fingers and hoping for the best.

Cryptocurrency is all the rage for investors. It has huge potential for profit. It is not associated with world governments so it may remain stable, even when there is economic turmoil. It's easy to get, cheap to use and it may just become the currency of the future.

If you have been on your devices buying and selling cryptocurrency, you will want to be on top of the latest in what’s new with this hot trend. Here are some things to be aware of.

The Future of Bitcoin

Even those who don’t actively trade in the cryptocurrency have heard of Bitcoin. It was invented in 2008 and went into use in 2009 when it was released as open-source software.

The Stock to Flow model was created by Plan B and it is one of the most reliable price prediction tools in the Bitcoin space. It predicts that Bitcoin’s value will continue to rise due to its rare status. There aren’t many Bitcoins in existence and there are even fewer entering the market.

So far, these predictions have been seeing the light of day. In February, Bitcoin closed at 26% above its projected price point. It is looking like it just might reach its end-of-year target trading at $288K. This will call for a 400% value increase before December, but it may just happen.

Even those with a more conservative outlook are foreseeing an unprecedented rise in the currency predicting year-end values may be closer to $200K, which is still quite impressive. The trajectory is set and many are saying Bitcoin will be worth close to half a million dollars in the not too distant future.

Hot Cryptocurrencies to Consider Investing In

Bitcoin is definitely hot, but here are some other cryptocurrencies that have been exceeding expectations with no sign of stopping any time soon.

Etherium: Ehterium is the second-largest cryptocurrency behind Bitcoin. It was introduced in 2013 and went live in 2015 and it uses blockchain technology. Its total market capitalization is at $221.2 billion and it hit an all-time high value of $1958 in February 2021.

XRP: XRP is a digital currency created by Ripple Labs and it runs on the Ripple blockchain system. Popular with banks and other financial institutions, it was trading at 48 cents at the beginning of March with a market cap of $48 billion.

Stellar: Steller is an open-source blockchain payment system created in 2014 by the co-founder of Ripple. It was trading at 42 cents in early March with a market cap of $44.7 billion.

Tether: Originally known as Realcoin, Tether launched in 2014 and was one of the first cryptocurrencies tied to the U.S. dollar. Its relation to the fiat economy makes it more stable than most. It was trading at $1 in early March and has a market cap of $37.6 million.

While Tether makes a good investment, it should be noted that the company is currently a subject of a New York attorney general investigation. Allegations claim the firm held no dollar reserves to back the coins in circulation for periods of time that date back to 2017.

Cardano

Cardano is a public blockchain and cryptocurrency project that operates as a non-profit. It was trading at $1.15 in early March with a market value of $36.6 billion.

Will Cryptocurrency Become an Accepted Form of Payment?

As Bitcoin’s value surges, more companies and industries are beginning to accept cryptocurrency as an acceptable form of payment.

Mastercard, for example, is planning to give merchants the option to accept cryptocurrency payments later this year. This will be a first for the financial institution. They have not yet announced which forms of the digital currency they will be supporting.

Mastercard CEO, Michael Midback announced plans to integrate cryptocurrency payments directly into the company’s networks. He feels the move will provide maximum flexibility for customers and merchants. Businesses that opt-in will be able to conduct business in innovative ways with customers with crypto to spend.

While this seems like a good option, there is no saying how this will play out. After all, most Bitcoin holders see their cryptocurrency as an investment, not as a payment option. However, there’s no saying that Mastercard will be accepting Bitcoin in their new initiative.

Cryptocurrency is also being seen as the future for payment options in the travel industry. It is preferable for travel companies because it is decentralized and therefore not controlled by banks or governments.

CheapAir was one of the first travel agencies to accept Bitcoin. They now have their own processing technology that allows them to covert cryptocurrency into dollars for exchange purposes. They are looking forward to the day when all suppliers accept crypto as this would eliminate the need for the exchange process.

Conclusion

If cryptocurrency stays on its course, it will be one of the smartest choices investors can make. Bitcoin currently leads the pack, but there are plenty of other growing platforms on its heels. Its popularity may make it a universal currency in finance, travel, and other industries.

However, it is worth it to note that the market is extremely volatile, so who knows what the future may hold? Monitor your devices, keep track of your stocks and stay vigilant to find out what happens next.

It may be an underestimation to say that 2020 has had its share of surprises. If there’s one thing we can all learn, it’s that nothing is a sure thing… and that includes investing money.

Investing has its share of risks but when it comes to where you should be putting your money, here are some wise moves to make.

Best Investments

There are a wide variety of investment choices including safe options like CDs and money market accounts to medium risk investments like corporate bonds and high-risk picks like stocks. Here are some investments you should be made to create a well-rounded portfolio.

High Yield Savings: This relatively safe investment is similar to a savings account, but it yields higher returns. It also allows you to access money quickly by transferring it to your primary bank.

CDs: CDs or certificates of deposit have specific maturity dates that can be weeks to years in advance. Once they mature, they accrue interest. You can withdraw your money at this time or reinvest it, but the money will not be available between maturity dates. CDs are a safe investment and yield a higher return than savings accounts.

Short Term Corporate funds: These are bonds that are issued to investors by corporations. They are typically short-term with a one-to-five-year maturity. As compared to intermediate or long-term investments, their short-term status makes them less likely to experience interest rate fluctuations.

S & P Index Funds: S & P Funds provide higher returns, but they come with their share of risks. Essentially, you are investing in some of the most successful companies in the world. And the fact that you are buying into all of these companies means instant diversification. The funds average a 10% return annually and are relatively inexpensive to purchase.

Dividend Stock Funds: Dividend stock funds are a way to invest in the stock market with reduced risks. Dividends are part of a company’s stock that is paid out to shareholders typically yielding a return each quarter. Investors benefit by getting paid in dividends and through long-term market appreciation. While dividend stocks are considered safer than growth stocks, they come with their share of risks making them more suitable to intermediate and advanced investors. However, making wise buying group investments in a stock fund can reduce volatility.

Best Stock Investments

Advanced investors will be keeping an eye on stocks. Here are some that are predicted to outperform themselves in 2021.

iRobot: iRobot is the company responsible for Roomba vacuums and Braava robot mops. It is quickly establishing itself as a company consumers can trust. It is predicted to grow along with the need for AI and robotics in the home appliance space.

Upwork and Fiverr: The online gig economy is steadily growing. Upwork and Fiverr are two online freelance platforms that are leading the revolution with the stocks to prove it. Upwork has more sales but Fiverr is showing improved recent growth making them both promising investments.

Redfin and Zillow: These homebuying platforms are bringing a change to the traditional real estate market. Redfin describes itself as a brokerage and is the more conservative of the two while Zillow is a more aggressive marketplace. Each shows unprecedented growth seeing the exchange of trillions of dollars each year.

Beyond Meat: The environmental and health-conscious trends are taking over and companies like Beyond Meat are seeing the profits. The company is outpacing its competitors pushing distribution across supermarkets, restaurants, and directly to consumers.

Etsy: Esty plays two sides of the coin appealing to both the online gig economy as well as the e-commerce boom. Before the pandemic, it was estimated to have a 5% share of the $100 billion dollar niche adoption. Now that same market is measured in trillions of dollars. And with Etsy’s strong brand identity, it is predicted that it will continue to thrive.

Should I Invest My Stimulus Check?

The idea of the stimulus check is to spread money around so it boosts the economy as a whole. But if you are lucky enough to have a steady income during the pandemic, you may choose to invest yours instead.

If you choose to take this route, there are several directions you can take it in.

Here are some to consider.

High Yield Savings Account: These are low volatility investments that will provide you with direct access to your money.

Stock Market: The stock market is a riskier investment, but if you are going to play, now a good time to get in on the ground floor. Experts say that you may be able to take advantage of heavily reduced prices due to the earnings outlooks of 2020. Review stock market conditions to find stocks that will pay off long-term.

Emergency Fund: Given the current state of affairs, investing in an emergency fund is another good option. This would get you prepared for future financial shocks. Aim for saving enough to get you through three to six months of spending.

Pay Off Debt: Got debt? If you’re in a place where you can use your stimulus check to pay it off, do it. This will help you improve your credit score, and it will keep interested from adding up.

Spread Your Money Around: You can also build up your portfolio by spreading your money around. An exchange-traded fund that includes stocks, bonds, and real estate could be a wise option. However, if you need more immediate access to your money, opt for a short-term bond fund. If you can afford to take a risk, consider high-return investments like cryptocurrencies.

Conclusion

2020 has thrown all of us for a loop but with the right investment choices, you can make your money grow. Safer options include CDs, high yield saving accounts, and money market investments. If you are daring enough to play the stocks, there are several companies that look like they are on a steady growth trajectory.

With stimulus money coming in, those who can afford to set some aside will want to consider their choices wisely. Paying off debt or investing in an emergency fund can also be a smart move for those looking to improve their financial situation overall. Where will you be putting your assets this coming year?

When the coronavirus first hit, it seemed as if the real estate market slowed to a halt. But before we knew it, things bounced back, and real estate remains one of the most worthwhile investments you can make. Read on to find out what you should know about investing in the current year.

Real Estate Predictions for 2021

The beginning of the pandemic saw a lack of homes on the market that lead to low mortgage rates. The lower rates turned things around, and the market is currently thriving. It’s now a seller’s market that sees soaring prices and increases in homeowner wealth.

Looking forward to 2021, experts are predicting the market will continue to thrive due to demand from buyers who put off purchasing because of the pandemic as well as people looking for bigger spaces due to work at home situations. Apartment and condo dwellers may also be moving to homes that are more private and virus-safe.

The pandemic also provided more virtual options for home shopping making the buying process that much easier.

Young adults, specifically millennials, are a target audience when it comes to first-time buyers. However, the rising price of homes may make buying unaffordable. While the median income of first-time buyers has increased in the past year, it may not be enough to meet the rising home prices.

But with Biden in office, millennials and other first-time buyers could get a financial boost. The home buyer tax credit he proposed would help Americans cover down payment costs. This goes hand in hand with the Federal Reserve looking to enforce a longer-term expansionary monetary policy that would stabilize interest rates for the next few years.

Best Real Estate Investments for 2021

With real estate booming, now is the time to invest. If you are looking for great investment properties, here are some that are recommended.

Adaptive Reuse of Retail Space: This is the process of converting and redeveloping unwanted retail spaces so they better serve the current market. Target properties include unused hotels, venues, office buildings,s and storefronts that were forced to close due to the coronavirus. Investors should consider transforming these spaces into an affordable housing complex or industrial real estate to make them more desirable.

Industrial Real Estate: The pandemic has created an increased demand for industrial real estate fueled by a growing need for data centers, distribution centers, and warehouses. These make smart investment choices.

Nonperforming Mortgages: Although the real estate market is booming, there are still plenty of owners in delinquent status. The government has been flowing cash into financial markets to keep lenders afloat, but this can’t continue indefinitely and the foreclosure and short sale wave could be coming sooner rather than later. Investors should be ready to swoop in on these deals to make the most of their money.

Rental Properties in Distressed Landlords: Eviction moratoriums have left a lot of landlords strapped for cash. They are unable to evict nonpaying tenants but are still responsible for coming up with their share of expense payments. As a result, many landlords will be forced to sell. Investors willing to ride out the current boom may be able to take advantage of discount prices.

Flipping

With home values increasing, now is a great time to fix and flip. With demand for newly renovated homes, investors who are smart about remodeling expenses can walk away having made a considerable profit.

Best REIT’s for 2021

Real Estate Investment Trusts (REITs) are a great way to invest in real estate without owning actual property. They are firms that own and manage properties. Investors buy shares becoming partial owners and are entitled to a percentage of rental and sales income.

If you are interested in investing in a REIT, here’s where you’ll want to put your money in 2021.

American Tower: This telecommunications infrastructure owns a portfolio that includes 181,000 cell towers in the United States and around the world. It boosts profits by increasing the number of tenants per tower. With the mobile trend and 5G rollouts on the rise, the tower is expected to increase existing leases and add more tenants in the coming year.

Equity Lifestyle Properties

Equity Lifestyle Properties owns sites that house tenant-owned resort cottages, manufactured homes, and recreational vehicles. Their 415 properties are located in popular vacation and resort destinations across the country. With retiring baby boomers looking to downsize, more tenants are moving into these properties yielding a growth average of 4% a year.

Americold Realty Trust

Americold specializes in temperature-controlled warehouses that are gaining traction due to the rising dine-at-home trend of the pandemic. They own 185 cold storage warehouses throughout the U.S., South America, Canada, and Australia. Contracted rent and occupancy increases have resulted in average yearly growth of 8% since 2015 with opportunities for development and acquisition on the horizon.

Conclusion

Despite the uncertainty 2020 has brought, the real estate market has rebounded and continued to grow. This has yielded increased wealth for owners and resulted in a sellers’ market with buyers vying for properties. In spite of this, low mortgage rates fuel the need to get in while it’s hot.

Those looking to invest are advised to make smart choices by putting their money into trending commercial properties, rental properties, nonperforming mortgages, and promising REITs. Experts predict these options will lead to an accumulation of wealth and revenue in the coming year. Here’s hoping you ride the real estate wave to see gold at the end of your rainbow.

2020 was quite a year. Almost synonymous with the coronavirus, it has had its share of ups and downs with reverberating effects felt through the financial sector.

Stock investors were at the edge of their seats waiting to see how each new promise of the vaccine and each new stimulus bill would affect their money.

Now, we are well into 2021 and, although the vaccine is making for silver linings, the pandemic is still very much an issue. Let’s take a look at what this spells out financially.

The Outlook at the End of 2020

Let’s start by taking a look at what the outlook was like at the end of 2020.

The market showed a roller coaster ride since the pandemic reared its ugly head. Although there was a significant crash in the middle of the year, with the S & P plummeting 34% in just 33 days, 2020 ended strong. By mid-December, it was hovering near an all-time high.

The outlook was good, but experts warned of more volatility. This would be contingent on the stimulus bills released and the progress of the vaccine. The Federal Reserve’s promise of keeping interest rates low was also a promising sign.

When it came to predictions for the coming year, tech companies were being favored as wise investment choices. Now into 2021, we are also seeing pharmaceutical companies as smart targets for investors, particularly those that are manufacturing the vaccine.

Investors were also favoring value stocks over growth stocks. This would be characterized by a call to the end of growth stocks which could be an overriding theme for 2021.

Will Inflation Hurt the Stock Market?

The stimulus bills that have been released in the past year have been great for boosting the economy, but inflation is a concern. With governments around the world printing money that may not have the funds to back it, we can only wait and see how this will affect prices in the coming year and what this will mean for the stock market.

While some investors are fearful of what may come, experts are saying that inflation may be countered by explosive economic growth. In fact, they say the mixture of post coronavirus financial growth and rising prices may be the perfect mix when it comes to investor gains.

Furthermore, it has been pointed out that inflation does not always go hand in hand with a dip in stocks.

When it comes to numbers, a monthly Bloomberg survey of economists showed that the annual GDP may nearly double to 5.5% as compared to numbers predicted just two months ago. The GDP growth combined with the inflation boost has made for significant stock market gains in the past and it is predicted that history will be repeating itself.

However, there is a chance that economic growth could falter in 2022. If this occurs, and inflation continues to increase, the outlook may not be as favorable.

Why Volatility May Be Good

Although there is positive news in terms of inflation’s effects on the stock market, investors are still concerned. This is a case for volatility in the stock market. But volatility isn’t all bad, especially when it comes to gold and Bitcoin.

Gold is currently trading low, significantly lower than its all-time high value of $2000 an ounce that was seen in the summer of 2020. However, gold is a tangible asset and, therefore, it performs well when prices are expected to rise. Investors are warned to stay vigilant in terms of what’s to come.

And while gold may be a smart investment choice, Bitcoin has been taking the spotlight in the past few years.

Bitcoin is limited in production with a cap of 21 million that can be created. With 18.6 million currently in circulation, its rare nature adds to its value.

Although Bitcoin dipped in the last few months, it is now trading at high values.

While Bitcoin is the trending investor choice, there are arguments for and against it when comparing it to gold.

Some say spikes in inflation will hurt gold’s value making Bitcoin the better choice. Others say that, because Bitcoin is not a tangible asset, it has no inherent value and could be essentially worthless over time.

This debate could become more significant depending on inflation trends in the coming year.

Conclusion

The stimulus bill and vaccine have done their part in setting the stock market on a positive trajectory. Inflation is likely to fuel the fire, but it comes with its share of risks. We can only wait and see how it will play out in the coming year.

In the meantime, experts are advising keeping money in value stocks, tech, and pharmaceuticals. Good luck making the right financial choices in 2021.