Many investors are happily saying goodbye to 2020, one of the most challenging years in history, and looking to the future with optimism, towards 2021. President-elect Joe Biden will take office on January 20 with a tray full of challenges, among which will be the tasks of guiding the country in the final stages (hopefully) of the coronavirus pandemic, making the economy roll again and shrinking the ranks of the unemployed.
Preparing your finances for next year is one of the smartest things you can do now, especially as there is no guaranteed schedule for the United States to get back to normal. This means looking at your investments and your goals and establishing stability for your financial life. And one of the most important sources of this stability in times of turbulence is the supply of cash.
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Money is king in 2021
The almighty dollar has great power in times of need. All the things you own cannot buy a gallon of milk at the supermarket, but if you have enough money on hand, you won’t have to worry about how to pay your bills immediately.
This is one of the reasons why financial planners recommend that everyone have an emergency fund with enough money to cover expenses for three to six months. And if you ever doubted the reasonableness of this advice, last year should have shown why such a big pillow is so necessary.
Tens of millions of real Americans have faced a cash crisis this year. According to the Center on Budget and Policy Priorities, 1 in 3 adults is having trouble covering their expenses, between 7 million and 11 million children do not eat enough because their families have little money for food and approximately 1 in 6 tenants are behind on their rents.
While the bright lights of effective coronavirus vaccines are shining in the country, it will be a while before everyone gets vaccinated and people can get back to something like their normal lives again. Pfizer says his vaccine will not be available on demand to the entire US public until June or July. ModernThe FDA’s COVID-19 vaccine received an emergency use authorization from the FDA on Friday night, which will be added to the available supply. And other vaccines for AstraZeneca and Johnson & Johnson are still in the middle of their clinical trials. Regardless, there is a long way to go before a sufficient amount of the population is inoculated, and a very real possibility of further economic disruptions and more financial problems before the country begins its real post-pandemic recovery.
Why you still need money
When all of the above are taken into account, there is one thing you can do to protect your financial health: Save some money in 2021. If you are still wondering why, consider the following:
- Unemployment is still high.
- The pandemic is reaching new heights, with the number of new daily infections and deaths twice as high as during peak summer.
- There is no better protection for financial or personal crises than money.
- The more liquidity you have, the better you are positioned to take advantage of buying opportunities in the stock market.
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Be ready for investment opportunities
As many investors learned (or relearned) in 2020, taking advantage of market downturns is a great way to build your portfolio. Those who had money in their hands and stomach to pull the trigger amid the bear market are now reaping valuable returns. If, for example, you purchased a Enlargement for $ 113.11 on March 2, your share would have been worth $ 402.35 on December 17, with a return of 255.7%. Another big winner was Paypal: A share on March 2 was 112.86, while on December 17 it was trading for $ 235.72 – a gain of 108.9%.
You can be sure that there will be many investment opportunities in the coming year, as stock prices do not rise directly, but tend to decrease and decrease.
This will be a smart year to prioritize the accumulation of cash so that you are ready in the event of crises and also so that you are in a position to take advantage of the market downturns. The coronavirus pandemic is far from over and the economy will not be fully recovered for some time. When the going gets tough, the tough guys make sure they have enough money, just in case.