You don’t need blood, sweat, and tears to grow your bank account in 2021.  You just need to make the right investments. Here are some of the best investments to make this year so your money can grow, grow, grow!

• Real Estate

Warren Buffet once said, “If you don’t learn to make money while you sleep, you will work for money until you die.” One investment that can help you to make money in your sleep… Real estate! Jamaica’s housing market remains buoyant, despite the economic challenges brought on by the COVID-19 pandemic. Properties continue to hold their value and have even increased in worth.  Buying and owning real estate can be a lucrative investment strategy. It can generate ongoing passive income and be a good long-term investment if the value increases over time. Rentals are growing in demand, and not decreasing in price since the value of property rarely goes down. Let’s talk about natural appreciation – the population continues to grow and people continue to need places to stay and  live.  

Short term rentals

There are several types of real estate you can invest in, and several ways to make money from them.  You can do short term rentals like AirBNB. That market is not so great right now, but in a few months when tourism makes a big comeback, it could be a sweet spot.  Now might be the time to make that investment and get ready for the resurgence.

Long term rentals

You have long-term rentals, and this isn’t just residential rentals, where people live in your house or apartment and pay you rent.  You could also consider owning commercial or industrial property and renting it, or leasing land.  The idea is that your tenant is there for several months or years at a time, giving you a steady stream of income.

House flipping

If you watch HGTV, you’re probably familiar with the term “flipping”.  This is when you buy a run down property, fix it up, and sell it quickly at a profit.  However, you definitely have to know what you’re doing, or you could easily end up buying a property that needs a lot more work than you expected, and you end up losing money.

Buy and hold

Another strategy could be to buy and hold for the long term. Over the years, the property value is likely to appreciate. You could rent the property for those years, and then later down the road, sell at a profit.  A great example of this is Richmond in St. Ann.  Richmond opened right after the recession.  These gorgeous three bedroom homes were selling for about J$15 million dollars (US$172,000). Now they’re selling for as much as J$40 million (US$266,000)!  So people who bought the first wave in 2010 could make a handsome profit by selling now, whether they bought in Jamaican or US dollars. Those homes are also in high demand as short term rentals for AirBNB because of the amenities like the pool and proximity to popular tourist destinations.

High barrier to entry

Ninety percent of all millionaires are said to be invested in real estate, and now you know why. If you play your cards right, you can possibly live for the rest of your life from rental income alone.  The downside is that there’s a high barrier to entry.  It’s expensive to start investing in real estate.  You need to have a lot of money saved up to afford the down payment and attorney’s fees, etc.  But if you have it, why not go for it?  If you don’t, there are other more affordable ways to start investing in 2021.

• Cryptocurrency

When Cryptocurrency was first introduced to the world, many people were hesitant to venture into this kind of investment; however, certain cryptocurrencies, like Bitcoin have given investors significant returns. In a previous episode, I told you how Bitcoin was worth US $0.0008 in 2010 and ballooned to nearly US$70,000 earlier this year.  Then it fell to less than US$30,000 just a month later, and now is climbing back up.  The crypto market can be very volatile, so it’s one to tread cautiously.  There are many people who still think Bitcoin is a bubble waiting to burst, while others are equally convinced that because of its scarcity, it’s the wave of the future… if only Elon Musk would stop tweeting!

If you’re willing to take some risk, the biggest transformation in wealth may be happening right now. While Bitcoin and Etherium are the more well-known cryptocurrencies, new cryptocurrencies continue to be created, but you have to do your research into which ones are actually legit and have a credible future.  You can check out our discussions about this on Taking Stock.  

• Stocks

One of the primary benefits of investing in the stock market is that it’s pretty easy and affordable to start. You don’t need as much money as real estate investing. While the stock market can also be volatile, it’s a lot more stable than cryptocurrency.  While the prices of individual stocks rise and fall daily, the stock market tends to rise in value over time.  History has shown that right after a recession is a great time for businesses to rebound, so a great time to invest in stocks.  The more the companies you invest in grow, the more the value of your stocks increases, and this becomes profitable for you as an investor. 

Dividends

Some stocks also provide income in the form of dividends. These payments arrive even if the stock has lost value, because dividends are based on the company’s profits, not on the price of the stock.  Dividends represent income on top of any profits that may come from eventually selling the stock. Dividend income can be a form of passive income – sidong and collect.  That way, instead of sitting in an account, your money works to make you more money.

• Yourself!

Last but definitely not least, you should  invest in yourself.  Building the capacity to sustain your wealth starts with investing in yourself.  If you acquire a level of skill and financial literacy, you can find ways to make money even if you suffer financial losses. Read for growth. There is a range of books that share financial advice from some of the world’s wealthiest people.  Invest in your education to increase your knowledge base and update your skills. You can actually lose your marketability, employability, or your competitive edge if your skills become outdated, so it is important to update and diversify your skills. Find a mentor to expose yourself to new knowledge. Network… The higher the quality of your connections, the more opportunities you will be exposed to. 

You are your most important source of wealth. 

Investing in your personal and professional growth will not only yield future returns, but it will also have an impact on the quality of life you experience well into the future.

Don’t be a slave to money, be its master by making wise investments.

Categories: MoneyMondaysJA