Some of the best investment options during the pandemic are not performing well post-pandemic. As highlighted by the Wall Street Journal (WSJ), shares in Netflix, Zoom, Moderna, and PayPal are falling fast. There are investments that should be considered as post-pandemic options, but what are they?
Government Bonds
Government bonds, where you loan money to the government in return for an agreed interest rate, are one of the safest investments and ideal for low-risk investors or people looking for cash flow. You can choose between short-term and long-term government bonds, but take note that long-term bonds have a higher interest rate risk. In South Africa, depending on the instrument, interest is fixed or floating and may even be zero. Governments use bonds to fund large projects such as power stations, roads and hospitals.
S&P 500 Index Funds
The Standard & Poor’s (S&P) 500 index funds include the five hundred biggest companies in the United States, and include Berkshire Hathaway, Apple, Microsoft and Amazon. It is possibly the most popular equity index in the world and often used as a performance benchmark for mutual funds, exchange-traded funds (ETFs) and more. It offers higher returns than traditional banking products or bonds and is a diversified investment that requires you to stay invested for a number of years.
Rental Property
Globally the rental market is very competitive due to increased demand after the pandemic. People are returning to the cities and normal lives but cannot afford to buy a property of their own as it is expensive, so they turn to rental properties. If you have a long-term investment view and are willing to manage the property or appoint a managing company to do so on your behalf, then rental property is a good choice. The best property investment options in South Africa are in Gauteng and the Western Cape.
Cryptocurrency
Cryptocurrency had a good run over the last few years, with high prices and many new investors, but is not the investment choice of conservative investors as the prices fluctuate extensively. According to Forbes, this digital asset that can circulate without the centralised authority of a bank or government, has a market value of US $982 billion.
Cryptocurrency has significant risks, but if you enjoy a challenge you could invest in any of the more than 20,000 cryptocurrencies available. The currencies with the highest market capitalisations are Bitcoin (BTC) and Ethereum (ETH).
Factors to Consider Before Investing
There are several factors to consider before you decide to invest, including risk tolerance, investment timeline, and available funds. How comfortable are you with fluctuations in the value of your investment? Cryptocurrency is the best investment option for those with a high-risk tolerance. If your tolerance is low, invest conservatively in government bonds.
When do you need the funds? If your investment timeline is long-term, you can take some risks with rental property or S&P 500 index funds. And the last but most important factor to consider is your available funds. The more money you have to invest, the higher your returns will be.
Jason Scholtz is the CEO of Envision Investments and a respected thought leader within the property and strategic investment industry in South Africa. Do you want to know more about the best investment options post-pandemic? Contact us today.
