Still another reason to consider investing in real estate is as a counter-play to the stock market. “For those with cash on hand and unleveraged balance sheets, there will be significant opportunities to buy up distressed and foreclosed properties.” “The real estate market on both the commercial and residential side will more than likely fall off a proverbial cliff as forbearance programs come to an end and stimulus funding runs out in early to mid-2021,” warns Marc Snyderman, COO and co-founder of the Apolline Group, LLC. Office buildings and many big-city downtown areas have seen sharp spikes in vacancy rates, while retail space has been hurt by the closure of tens of thousands of stores.īut the misfortunes of one year often create new investment opportunities in the next. But no one saw the coronavirus coming at that time, and it proved to be a game-changer.Ĭommercial real estate has been negatively impacted by a massive move toward remote basing of employees. REITs looked like a solid bet after both big gains in 2019 and a strong start with the economy in 2020. Which way will real estate go in 2021? It’s anyone’s guess. But that comes on the heels of a 28% gain in 2019. Real Estate Index REITs have shed 7.25% through December 24. I’m a big fan of real estate investment trusts (REITs), though the sector as a whole did poorly in 2020. But that’s exactly why it may deserve a close look in the coming year. Given the steady rise in residential real estate prices, as well as turbulence in the commercial real estate market, the sector does look like a mixed bag going into 2021. The fund was up an incredible 40% through November 30, and about 30% for 2019. With the effectiveness of COVID-19 vaccines still in the “too early to tell” stage, biotech may continue to be a strong sector in 2021 no matter what the general market is doing.Ī simple way to play the sector is through the SPDR S&P Biotech ETF (XBI) XBI. Still another stock sector to consider is biotech, which represents the cutting edge of the healthcare industry. Those approaching retirement need to take account for how much they have accumulated and make it an absolute priority NOT to give a lot of that back to this inanimate object called ‘the stock market’." I also see 2021 as a crucial year for pre-retirees, after 2020's ‘warning shot’. “That implies inflation pressure, as the global economy kicks back into gear and input prices rise. “Certain commodities such as industrial metals and agricultural products appear to have a good reward-risk tradeoff in 2021,” notes Forbes Senior Contributor, Rob Isbitts. Given the potential for both economic growth and rising inflation in the coming year, certain commodity sectors may become investment-worthy. I Expect ETFs like the Invesco Defense ETF (NYSE: PPA) to outperform the market.” “A rebound in commercial aerospace and solid defense spending in 2021 is expected. “Defense stocks under-performed in 2020 but have a 30+ year track record of new highs within 30 months,” advises Scott Sacknoff, President of SPADE Indexes. 2021 may prove to be a year when investors will be scrambling for other sectors to favor.įortunately, there are plenty of options. But at the same time, tech stocks have a convincing track record of steady, spectacular gains over several years, reliably followed by equally impressive declines. I’m certainly not calling that shift in 2021. Moving beyond Tech Stocks and the S&P 500 If you’re heavily invested in the S&P 500, a large cash position will give you an opportunity to invest in emerging sectors if the general market declines. This is another reason to build your cash reserves. If that sector begins to head south, it can drag the major indices down with it. The major indices, like the S&P 500 and the NASDAQ 100 have largely powered forward on the strength of tech stocks. That said, you may want to become more selective. And the averages strongly favor maintaining a large position in stocks. No one can say for certain which way the stock market will head in 2021, but investing in stocks has always been about playing the averages. It won’t provide big returns, but will leave you better prepared for whatever will be coming next. With stocks ending 2020 in record territory, the best investment strategy may prove to be building up cash reserves. But cash serves a much more important purpose in this kind of investment environment: it provides liquidity. But there are some banks that are paying interest rates at the higher end of the scale. It’s true that it’s hard to earn a decent return on interest-bearing investments, like certificates of deposit or U.S.
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