Investing is always a long-term activity that requires patience and risk tolerance. This is especially true in 2021 when the economy is slowly recovering from the pandemic, and many economists predict increased inflation. If you don’t invest because you are uncertain about what 2021 will bring, make sure you read this article where Michael Eisenga shares the investment challenges of 2021 and discusses whether or not they should stop you from investing at all.
Mike Eisenga is a successful real estate and business investor with years of experience. During the years of operating American Lending Solutions and First American Properties, he has been through the ups and downs of the economy numerous times. Michael suggests that even though the uncertainty of this year can stop newbies from investing, there are also many lucrative opportunities for resourceful and informed entrepreneurs to take advantage of.
Challenge #1. Slow Economic Recovery
Despite the rollout of the vaccine and the reopening of businesses, the economy is recovering slowly. Consumers are still holding onto their money. Surveys show that only one out of five people are spending at the same level they were before the pandemic. Respondents who are limiting their spending believe that they will return to their usual spending habits by August (10%), over the next nine months (8%), and in the next year (15%). Another factor of slow economic growth is a unique situation where millions of people in the U.S. are unemployed while many companies in the manufacturing, restaurant, and construction industries are struggling to find workers. Businesses that cannot fill the positions available are losing possible profits due to the shortage of labor, and unemployed people live off of benefits instead of contributing in a meaningful way.
Challenge #2. In-Demand Real Estate
Low mortgage rates are enticing more and more buyers to invest in real estate. Although the market is still recovering from the pandemic, it is estimated that home prices will increase by 11.4% in the next year. Some locations in the U.S. experience a considerable housing shortage, so with adequate research, skilled investors can find areas where demand exceeds supply and get a good return on investment. While there is still a moratorium on foreclosures and evictions until June 30th, economists believe that many homes will be foreclosed afterward, making them available for purchase.
Challenge #3. Dollar and Cryptocurrencies
While the rollout of stimulus payment has helped economic recovery in many ways, U.S. debts to the rest of the world have gone up to above 108% of GDP, leading to potential financial crises. For the longest time, the U.S. dollar was used as a reserve currency since there wasn’t a serious alternative available. As a big surprise in 2020 came a rise of Bitcoin, and even though many are skeptical about the cryptocurrency, millennials are more inclined to own and invest in cryptocurrency, making some believe that cryptocurrency can supplant dollars someday in the future.
Although there are many ways to invest your money in 2021, do your research and access your risk tolerance. Don’t invest all of your money in stock, real estate, or bond only. Minimize your risks by investing slowly and on schedule, do adequate research when it comes to real estate, and diversify your portfolio if you invest in the stock market.
About Michael Eisenga
Mike Eisenga is a successful commercial real estate investor with a banking and finance background and is the former mayor of the City of Columbus. As a President of both American Lending Solutions, a mortgage lending company (he founded and operated from 2000 to 2018), and First American Properties, he has a track record of creating and operating successful businesses. Mr. Eisenga is also devoted to property development and construction, primarily serving smaller local communities. Especially in the senior housing sector.