The world’s investment markets have undoubtedly experienced a challenging 2021, with the post-coronavirus recovery threatened by ongoing variants (such as Omicron), intermittent lockdowns and associated economic uncertainty.
As a result of this, we’ve still seen some growth markets thrive this year, while others have experienced sharp depreciation due to underlying issues such as fluctuating supply and demand.
In this post, we’ll appraise some of the most relevant investment trends as 2021 draws to a close, while asking how they should inform your approach as an investor.
#1. Rising Inflation Will Shake the Marketplace
Undoubtedly, the current market conditions are tailor made for risk-averse investors, from the ongoing economic uncertainty to spiralling inflation across the globe.
During the pandemic, governments introduced various quantitative easing policies to help mitigate the economic decline, slashing base interest rates and borrowing at a rapid rate.
While they were confident that this wouldn’t precipitate excessive money printing and rising inflation, however, various factors triggered a hike in the cost of living throughout the western world (this is expected to peak above 4% in the UK and US).
Declining productivity and mounting debt will also drive inflation higher, potentially impacting currency investors and other high-risk derivatives in the marketplace.
#2. The Rise of Crypto as a Buy-and-Hold Asset
While crypto assets like Bitcoin have also endured a highly volatile year, it’s interesting to note that the price of BTC is around three-times higher than it was approximately 12 months ago.
This highlights a clear trend in the market, as while leading crypto assets will continue to experience peak periods of volatility and intermittent bull and bear runs, they will also showcase consistent growth over a sustained period of time.
In this respect, 2021 has seen BTC and Ethereum (ETH) emerge as contemporary buy-and-hold assets, which offer secure stores of wealth that will appreciate markedly over time.
This trend is expected to continue through 2022, and this may be good news for investors who can identify the most promising and best value blockchains.
#3. Diversification Will Prove More Important Than Ever in the New Year
This year has seen so-called “portfolio diversification” become more important than ever, particularly given the high-risk nature of the financial markets and the threat of being exposed to a single market or asset class.
So, you’ll need to continually review and rebalance your portfolio towards the end of 2021 and into the New Year, factoring in both the constantly-changing economic climate and your own expectations as an investor.
You may need some assistance in this respect, with investment management firms capable of providing insight and able to guide your decisions in the near and medium-term.
This will require you to pay a service fee, of course, but this should pale when compared with the potential for increased returns.
