President Trump is yet to concede his presidency following the election results of 2020. His team of legal experts is still frantically disputing the validity of the election results in court. That said, recent events suggest that it’s only a matter of time (Nevada Supreme Court Reject Trump’s Election Lawsuit).
Of course, while some are looking forward to the incoming Biden administration, others can’t help but feel anxious about the change. Most investors, in particular, are wary of Biden’s economic policies. Will he be restoring high corporate tax rates and introducing additional regulations on the market? That’s just one of the many questions that keep investors up at night.
So what should investors do now?
If you’re reading this, then you’re probably wondering whether it’s time to minimize your risk by switching to low tax investments. Perhaps you’re looking to exit the market altogether, but you’ll probably just end up jumping the gun.
Once Biden assumes the presidency, it’s more likely that he will be keeping at least some of Trump’s economic policies to appease the GOP. After all, the Republican party holds most of the senate’s seats (50) plus potentially two more after Georgia’s elections. In any case, Biden will need their support if he is to pass bills that will revitalize the US economy. Many speculate that is one of the reasons why Biden chose Janet Yellen as his Treasury Secretary. This move has been applauded by both Democrats and Republicans alike.
Of course, let’s not forget the recent surge in the stock market, which brought the Dow to above 30,000 for the first time in history. While the boost is a direct result of Trump’s plan to revitalize the US economy, Biden will undoubtedly capitalize on the gains following his transition into office. Following Pfizer’s announcement of a working Coronavirus vaccine and Operation Warpspeed already in full swing, it is expected that the state and the federal government will start lifting economic restrictions much earlier than expected.
If you’re still convinced that you need to leave stocks and start diversifying in low tax and low risk investments, here are a few suggestions about where to put your money in 2021.
The Construction and Infrastructure Sector
One thing that was clear in Biden’s economic policies is that he wanted private and public sectors to spend more on infrastructure building. If he successfully pushes this agenda in the senate, investors in the construction business can expect to see their portfolio humming next year and beyond.
Consider investing in companies like Martin Marietta that supply aggregates and heavy building materials to construction companies. Limit your options to companies with good financial records and well-established supply chains.
Aside from suppliers, investors should also turn their gaze towards manufacturers of construction equipment such as CAT Inc. Just keep your eyes open for developments in policies that affect green energy, which is bound to affect these companies adversely.
The Healthcare Sector
Of course, no seasoned investor would miss out on making a sizable investment in the healthcare sector. The massive demand for the production and distribution of vaccines for COVID-19 has yielded an equally enormous boost in the pharmaceutical industry.
However, that’s not the only reason why investors should buy more stocks in healthcare. If you’ve followed Biden’s bid for the US presidency, then you would know that healthcare played a crucial role in his campaign strategy. Hence, investors shouldn’t limit their options to pharmaceuticals, but healthcare insurance and manufacturing companies as well.
One such company that investors ought to consider is called Becton Dickinson. They are well known for producing quality equipment and supplies for medical use. Aside from possessing good management and strong distribution channels, many of their products will play a key role in getting the COVID-19 vaccine to people in the US and around the world.
As for healthcare companies, consider a company called United Health. This insurance company has the potential to grow significantly under President Biden’s economy. The projection is based on the fact that United Health has one of the country’s best Medicare enrollment programs.
Other top-performing health insurance companies that offer standard policies may also be worth considering. However, investors are advised to tread carefully as these companies are generally more susceptible to policy changes mandated by the government.
The Energy Sector
Investors are advised to steer clear of traditional oil and fracking industries. Many businesses have been limiting their use of fossil fuels. That is to say, business is not looking good for conventional energy companies under the Biden economy. You see, Democrats have been pushing policies for zero carbon emission for years, and now they’ll have all the opportunities to push their agenda in the White House.
If you must invest in the energy sector this coming 2021, limit your options to renewable energy companies as they’ll be receiving ample support from the Biden administration. This includes manufacturers of solar panels, solar-powered vehicles, and the like.
But what about investment opportunities and management of your portfolio?
As we’ve stipulated earlier, investors can expect to deal with higher income and taxes on capital gains. When that happens, it might be a good idea to switch to a Roth IRA or 401K to make the most out of your savings. Otherwise, you can end up with a severe tax hit once you start receiving regular IRA or 401K distributions.
The idea is for investors to minimize their risks considering all the money printed to cope with the COVID-19 pandemic. There are viable high yield investments, that’s certain, but you always need to consider whether or not the gains will be enough to offset inflation.
Another string that you can pull to make the most out of your investments is to reduce your brokerage fees. That’s something that practically any investor can do nowadays with personal finance services like Stash.
For as low as $1 per month, Stash lets you buy fractional shares from thousands of companies with a maximum ETF of $1. Whether you’re a savvy investor or a complete beginner, Stash gives you access to all the money services you could need (investment, banking, stocks, financial advice, etc.) under a single flat-fee subscription.
A Quarter Richer is a finance blog dedicated to helping people make better decisions in the areas of spending and personal finance.