Where should you invest in 2021?

Where should you invest in 2021?

What is the most profitable investment in 2021? Are there deposits, government bonds or real estate? We will tell you about all the popular ways to make money on investments, and how the situation is changing compared to last year.


What Happened to Investments in 2020?

The beginning of 2020 was very optimistic as US stocks hit historic highs. All analysts had the best investment forecasts last year.


However, everything changed quickly during the quarantine: a halt in the economy, a fall in the stock market, a decrease in the discount rate of the national banks of many countries. The economies of Europe and the United States were literally flooded with cheap money to support citizens and entrepreneurs.

On the one hand, investors became very careful in matters of analytics. So they did not make risky investments. On the other hand, a lot of cheap money came from the printing press in America, Europe and around the world. An interesting situation in Ukraine: there is a financial crisis and many people became unemployed, but the number of deposits increased in 2020, and banks do not burst, as in 2014.


This means people have a lot of money they would invest. Has there been a financial crisis in Ukraine, or have citizens become more financially literate? In any case, this is a good sign.


Are deposits income or capital preservation?


The income from deposits in Ukraine was high due to the high discount rate during 2014-2019. It was supposed to stop the rise in inflation. But over time, the National Bank stabilized the situation. While the income from deposits is at the level of 5-7%. And you need to deduct 20 percent of personal income tax from this amount.


As a result, the income is higher than the level of official inflation in the country. If you are choosing between keeping money under the mattress and depositing, then the second option is definitely better, because:


? Money will not be stolen from the house;


? You will not lose 5-6% of your money every year due to inflation.


What to choose: securities or deposit?


Did you know Ukrainians can lend to the state? This is called the purchase of domestic government bonds (DGBP). Why is it profitable to invest in it?


1️⃣ At the last auction, government sold their debts at almost 12 percent per annum. This is much more than the interest on deposits.


2️⃣ Compared to deposits, the income from government bonds is net, tax-free. So you do not have to pay 20 percent of the income as you would from deposits.


3️⃣ The guarantee from the state for the payment of money. For example, a bankrupt bank will pay a maximum of UAH 200,000, if the bank is a member of the Deposit Guarantee Fund.


The cryptocurrency and real estate – is it worth investing?


As for the first, there is a lot of hype in the world. The bitcoin is growing constantly. However, financial experts are sure this cannot be so all the time. At some point, this soap bubble must burst. Real estate in Ukraine will always be a reliable way of investing. For example, in Kiev there are approximately 20 square meters per inhabitant. But in the most populous city in Europe, London is 40 squares per person. This is the result of the fact there are many dormitories and communal apartments in Kiev. This means the demand for new housing will persist for decades and new homes will be built.