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After a very turbulent year at a social and economic level, with very low interest rates in developed markets (EUROPE, USA, etc.), there are many savers who have considered or are considering how to start investing in the stock market in the year 2021. In other words, they are going to move out of assets with lower risk to other assets with higher risk.
The first thing that we have just analyzed unintentionally is the risk/return trade-off. If I want a higher return, I have to be willing to assume a higher risk.
Consequently, we can deduce that in order to invest in the stock market in 2021, we will have to decide how much I am willing to risk?
Investing in the stock market in 2021 may be marked by short-term volatility and challenges that we are going to face, success/failure of the different vaccines against COVID 19, trade war between USA and CHINA, definitive exit of the United Kingdom from the European Union, etc.
If despite these risks we are willing to invest in the stock market in 2021, the first thing we have to know is that if we are neophytes in the subject is another premise and / or maxim that tells us that the percentage of investors who win in the stock market in the short term is very small and the longer the horizon of my investment the more likely I am to win in the stock market.
Defined the time horizon of my investment, the risk that I am willing to assume the capital to invest (never invest money that I will need a priori in the short term), shall we go to how to start investing in the stock market in 2021?
Many investors who start in the world of the stock market have the problem that it seems to us a very complicated world, of great knowledge, of great sharks that are going to "steal" our money etc. We will choose a regulated broker/bank, even if the commissions are somewhat higher than those of dubious reputation or whose fiscal domicile is in Cyprus, Cayman Islands or other exotic places.
But we still have no answer to the question of how to invest in the stock market in 2021.
As everything in life, the first thing to do is to be trained (it is not necessary to have a master's degree in the stock market, but it is necessary to know basic notions, for example, if I choose a company by "hearsay" or because it seems to me a solvent company, etc.). At least I have to know the main sector of its activity, for example is it a financial, technological, pharmaceutical company etc. At this point we will start with the selection of where to invest in the stock market in 2021.
Training, most specialized brokers make available to investors free simulators to practice their investment strategies, therefore, it is good to learn through a DEMO and thus see how I can buy some shares, if they fall a % x its stock market valuation as it affects my investments, compare different shares of the same sector or country etc..
Once we have practiced with this DEMO and understand the type of orders I can place in the market or how to put a stop loss or take profit etc.. We can go forward with training in the DEMO or through the internet with the abundant literature that can be found.
Let's suppose that I have good prospects that in 2021 is going to be the year in which the companies dedicated to tourism will rise in the stock market because we will have an effective vaccine against COVID 19 and people will start to travel and enjoy the leisure that they have not been able to in this year 2020. In this assumption I could include in my portfolio shares for the year 2021 that develop their activity in the tourism sector and once I have chosen the sector I will proceed to choose the company, I can compare its stock market evolution between different shares and decide for example by its trajectory between one or another share to invest in this 2021.
Another option is to trade directly on an ETF that replicates the movement of the Tourism Sector worldwide, for example. The best option is to use online trading platform such as https://dotbig.com/. This platrom not only provide you with tutorials, but keep your money in a safe-zone by using automatic tools.
If in addition to the tourism sector I consider that there are other sectors that are also going to behave very well and are good ideas to invest in the stock market in 2021, I would proceed to choose a sector and then a company or I could use an ETF (exchange-traded fund).
I can also invest in the stock market in 2021 or any other time in a country, i.e. if I consider that the Swiss stock market is going to have a very good stock market performance in 2021, I could invest in the stock market in 2021.
In the end, without having an excellent stock market knowledge and without using a technical analysis, without seeing the accounts of the company and if its profit has increased in the last 5 years, sales that it may have had, etc. I have been able to choose where I want to invest in 2021.
This training can always be expanded through free or paid webinars, it is clear which of them will be better, but in the end everyone is free to choose.
In short, to invest in the stock market in 2021 the first thing we have to do is to train ourselves, be aware of the risks we assume and prepare for possible market volatility in the short term.
