Best Tips To Invest 10000 Dollars in ASX in 2021
The year 2020 was a roller coaster ride for everyone, from an investors perspective it was one heck of a roller coaster ride. The year began with the threat of a world war between USA and Iran and the markets were recovered when the threat of an oil price war caused a crash in global oil prices in tandem with the Covid-19 breakout that caused a massive market crash in March 2020.
Since March, things have been topsy turvy and while this time has been stressful for everyone, from an investment perspective it has not been so bad. Why? Simply because the high uncertainty and volatility created by the health, economic and financial crisis allowed investors the opportunity to make big profits by timing the markets correctly. This was very risky but if done right, many investors would have made lucrative profits over the year.
For instance, everytime any vaccine manufacturer had a successful trial, the news of this success caused the markets to jump up. Investors simply had to follow the news, keep a keen eye on the developments and trade smartly.
2021 is looking much more hopeful that 2020, although last year at this time we had similar expectations of 2020. But then of course we cannot predict the future, we can only use the currently available data to forecast the future and the current data shows us that the USA is going to have Democrats back in power, which will see a shift in the US foreign policy, Australia and China seem to be on the road to recovery as far as their diplomatic relations are concerned and most importantly the vaccines for Covid-19 are being rolled out. All of these developments mean that we can hope 2021 to be more stable than 2020 was.
If you have got $10,000 saved up and are looking for a way to invest, then the stock market is probably your best bet right now. Why not a savings account? Simply because interest rates are at an all time low and depositing your money in the savings account is not going to earn you anything. In Fact if the inflation rate goes above the rate of interest then you will only end up losing your savings.
The stock market on the other hand is offering once in a lifetime opportunity to make massive gains if the right investment strategy is adopted. So how are you going to invest your $10,000 in the ASX right now?
AUD 10,000 are a lot of money, any investment strategy you go for needs to be based on data analytics and a firm foundation. Firstly, keep in mind that you will have to diversify your investment. So AUD 10,000 will not go into one sector alone. You will first need to identify sectors that have performed well in 2020 and are expected to perform in 2021 as well.
With the vaccines being rolled out, the healthcare sector is going to be on top of every investment analysts list. Health care sector includes pharmaceutical and biotechnology sectors as well. Through out 2021 and for the next few years as well, the health care sector is going to be an important sector and will attract a lot of individual and institutional investment because now we are at that stage where the vaccines will need to be developed, tweaked and updated. Not only vaccines but the researchers will also need to work on medicines and other drugs to combat Covid-19 and its side effects. Apart from this there is also a need to develop a supply chain network for the delivery of vaccines.
Although Australia is not actively taking part in the development of Covid-19 vaccines but the government has tasked CSL Limited to prepare for the next pandemic, for this purpose the government will help CSL Limited create a hub of excellence for the next virus.
The construction sector is another sector that will see increased activity in 2021. Why? Because many governments have realised that now that there is light at the end of the tunnel, they need to take measures to cushion their economics against the waves of economic recession that will continue to have their aftereffects well into 2021. For this reason the construction sector has been chosen by many governments as a way to kickstart and invigorate the economies because focusing on the construction sector means that it will kickstart some 17-25 other related sectors with it.
The federal government has already committed to invest up to $110 billion into the construction sector spending between 2020 to 2030. Investors should therefore keep an eye on big names in the construction sector such as
- CSR Limited
- Downer EDI
The mining sector is also going to be in the spotlight in the next year. The year 2020 was also good for the mining sector. Iron Ore, Lithium and Copper are the key exports from this sector for Australia and the majority of the exports are to China. 2020 saw Australia-China relations at perhaps their lowest point but in spite of this China increased their purchases from the Australian economy. If these relations improve in 2021, the mining sector can ride on the wave of Chinese exports.
Key companies to look out for in this sector are
- BHP Group
- Rio Tinto
- OZ Minerals
The tech sector is expected to boom further, 2020 was also a good year for the tech sector as the global population shifted to a more tech centred lifestyle. Advancements in AI, bio tech and other areas related with technology will fuel the growth for the tech sector.
The Australian tech sector is not as advanced as the US tech sector, which attracts the bulk of the investment but the young tech sector of Australia is growing each year and this means that there is a lot of space for startups to claim their space.
Afterpay is perhaps the biggest success story for the Australian tech/fintech sector. Xero is another name that is globally recognized, originating from Australia. Investors should therefore keep these two names in their mind and also watch out for emerging players in the tech market.
Also See: Initial Public Offering on the ASX
While the three sectors mentioned above are expected to grow well into 2021, there are certain sectors that suffered in 2020 but they are expected to recover as soon as the situation starts to return to normal, perhaps in the second half of 2021. It would therefore be wise to buy into these sectors while they are selling low, to reap profits as these sectors start going up again.
Some of the recovery sectors identified by industry experts include
- Banking and Insurance
Whatever strategy you choose, make sure that you diversify your stocks well enough and remember that the suggestions given in this article are based on the advice of market experts and analysts, who in turn have based their opinion on the data that is available as of today.
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