The pandemic that struck the year, everyone wished to wind up soon, is over. Despite the coronavirus, the year 2020 did give some reasons to cheer too. The volatile equities had a good run in the past 7-8 months. The gold prices have fallen after a strong rally, falling interest rates and bond yields have made liquid funds and small saving instruments less attractive.
It will be interesting to see which investment trend picks pace in 2021. Let’s have a look at some investment options for 2021.
Abundant liquidity and prospects of a COVID-19 vaccine is causing the rise of equity markets worldwide and have raised the possibilities of better economic growth. The equity markets are overvalued so one must invest in a staggered manner. An investor must ensure diversification across large, mid and small-cap funds.
In December, Sensex crossed 46,000 points and continues to record fresh highs while the Nifty50 index gained 10 percent since the onset of the year. Investors need to show patience and take longer time frames while investing in stocks given the current market scenario.
If you are still considering investing in overseas stocks, then consider international mutual funds available through domestic houses. You must choose wisely and allocate around 10 percent of your assets in global funds.
If you are planning on making Gold a part of your portfolio, consider gold for diversification/hedging against inflation and not from the point of generation of high returns.
The yellow metal prices have risen 26.73 percent in 2020 but the news of vaccine arrival tripped the shining metal’s run. If you haven’t already invested in gold, then the recent consolidation in prices can be a good beginning. Buy gold when prices fall intermittently.
Debt funds that invested in corporate bond funds and banking & PSU bond funds delivered good returns this year. Low duration, corporate and Banking & PSU debt funds can be an attractive investment option. But do not get swayed by the past returns. Over investing in some and under-investing in others can prove to be disastrous.