With savings rates losing to inflation, holding onto spare cash is becoming more tenuous every month. Rather than letting it sit in your bank account
With savings rates losing to inflation, holding onto spare cash is becoming more tenuous every month. Rather than letting it sit in your bank account and experiencing no real growth, you could invest your money instead and diversify your assets. These are three captivating investments that could enable you to see some returns in the post-Covid financial era.
1) Real Estate
Examine the post-Covid property market
Real estate is the traditional choice for investment, and for a good reason. Although it was a testing year for real estate, the housing market remained resilient, even creating new opportunities for those looking to invest in 2021.
Paresh Raja, founder and CEO of bridging loan provider Market Financial Solutions (MFS), believes ‘there is a strong chance that 2021 may even surpass 2020 in positive property sector growth’. In an interview with WhatInvestment, he adds: ‘After the current lockdown passes, I am confident that the high levels of activity seen last year will continue; further increasing the average price of UK property.’
However, investors need to be savvy to the new norm. Businesses have been forced to adapt to remote working, and employees have grown accustomed to it — many preferring it. Therefore, lots of employers are considering making working from home a more permanent arrangement, even post-lockdown. This is sure to encourage homeowners to seek out more space. Properties with spare bedrooms, and other places where a home office can be put in are predicted to increase in demand. As Raja says, ‘Having spent the majority of last year home-bound, UK homeowners will be desperate to move home to larger lodgings’, a trend that should offset any negative market developments.
Buy property you can use and enjoy
Other than pure, lucrative profit, investing in real estate has other perks. Why not consider a property that you can enjoy yourself in too? Perhaps somewhere in an idyllic location could double up as a spectacular holiday home. What’s more, real estate investments in certain locations bring added benefits. For example, putting money into government-approved property under the St Kitts and Nevis citizenship by investment programme grants applicants the right to citizenship in the country. Though, if this is too big a step, the scheme does allow you to invest in a government fund in return for citizenship instead.
Similarly, in a recent podcast, serial entrepreneur Jon Joseph Bourgerie talks about investing in a surfing house in Costa Rica. “My plan is to own assets that I can use and enjoy for two months a year, then rent it out the rest of the time.” Rather than chasing profits, explore property that will enrich your own life too.
Bitcoin is the dominant form of cryptocurrency. If you invested $1,000 in Bitcoin in 2015, it would be worth $200,000 at this moment. But it’s not too late to invest — some experts predict its price could eventually rise to $1 million. So if you’re happy to sit on it, ride the waves and fluctuations, you could come out the other side with a hail Mary investment.
In an interview with Bloomberg, Michael Saylor, CEO of MicroStrategy and $450 million investor in Bitcoin, explains why he is such a big believer in the cryptocurrency. ‘In an expansionary, monetary environment, you want scarce assets. The scarcest asset in the world is Bitcoin. It’s digital gold. Once people start thinking about what they want, which is a non-sovereign, safe-haven store of value, they’re going to realise that Bitcoin does the job of gold better, and you’re seeing all of the institutional flows move out of gold into Bitcoin’.
Before putting money in, however, it is important to do your research. This is a notoriously volatile market so make sure you know exactly what you’re getting into before investing.
NFTs (non-fungible tokens)
Rather than investing in cryptocurrency in itself, you could also consider using it to trade NFTs (non-fungible tokens). NFTs are collectable digital assets that take many forms including digital art, sports clips and even tweets. In short, the industry has gone crazy and thousands of people are getting in on it. In March 2021, a CryptoPunk (a computer-generated avatar) was sold for $7.5 million so there is potentially huge money to be made.
Investing in the right NFTs can be tricky though. The space is still extremely new, so it’s difficult to gauge which pieces will increase in value. Gary Vaynerchuck, an early investor in Twitter, Facebook and Amazon, believes that 97% of NFT investments are unfruitful, but the ones that stick will be magic. When purchasing NFTs for investment purposes, you must consider whether they will maintain their long-term value. Why are they significant? Are they the first of something? Will it still be relevant when the dust settles? Were they released by someone with lasting fame? Is it a new idea? Questions like this can help you gauge whether it’s worth your money.
3) New & Innovative Businesses
Tech has come out on top
The demand for online consumerism will not be limited to the pandemic. With the world being increasingly online-centric, and Covid-19 accelerating the digital world by seven years, it seems logical that many of the best ventures to invest in are to do with tech.
Direct-to-consumer (DTC) brands (companies that exist predominantly through online commerce rather than physical locations), for example, are worth considering. Back in the day, a brick and mortar store was necessary to start a business but not anymore. Direct-to-consumer is a tried and true business model, with no need for a store. This dismantles start-up costs, making it far easier for someone to start a small business online.
DTC brands cover a wealth of industries
Clothing is an industry where DTC has thrived — ASOS is a great case study for this. However, there are lots of other sectors also thriving. Whether it’s a subscription model for shaving like Dollar Shave Club, a mattress company like Casper, or even food with Hello Fresh, the growth of direct-to-consumer has reached almost every echelon of commerce. And new projects always appear, with outside-of-the-box ideas. Follow forums, read about new businesses, and keep an eye out for innovative concepts that use the format in a way no-one has thought of before.
It’s every investor’s dream to put a seed into a small company that blossoms into a global brand. Looking at future trends and taking risks is the only way to do this. Many passed up on the chance to invest in Uber in 2010 because they didn’t ‘get it’ and missed out on significant returns as a result. When you find a concept that the majority struggle to comprehend, this can be a good sign that you’ve found something worthwhile. Of course, it’s a risk, but that’s where the most fruitful investments begin.