All information in this article is not investment advice and should not be construed as such.
While President Trump and his legal team have not conceded the 2020 election yet, and some of his allies are still contesting the results in the courts, it’s most likely the transition to a Biden administration is going to happen. That may be welcome news to some, yet spark uncertainty and anxiety among others with the Biden economic policies having a lot of question marks. For example, will a Biden presidency mean a return to a higher corporate tax rate that Trump slashed with his tax cuts legislation? Will there be more regulations on the markets? A rise in the capital gains rate? Some of these prospects may have some investors looking to get out of the market or turning to less risky and lower taxed investments. But could that be premature?
Come January, the Biden administration could be looking at having to retain some of the Trump policies and build consensus with Senate Republicans with the GOP currently holding 50 seats and now facing two runoff elections in Georgia. A Republican-held Senate will mean needing to pick more centrist cabinet members, and needing to pass legislation that helps the economy. Biden did announce Janet Yellen, the former Fed chair as his new Treasury secretary, a pick that drew some praise even from some Republican lawmakers and even former Trump advisor Gary Cohn.
You also need to factor in the recent stock market boost. Even though the current stock market surge that put the Dow index over 30,000 came from Trump’s plans for revitalizing the economy, it’s very possible Biden will be riding the wave into office. And with the Operation Warpspeed program in full force and Pfizer’s coronavirus vaccine announcement, the mass distribution of this vaccine could also mean both federal and state governments completely open their economies sooner than expected. But for those who might still be thinking about exiting the stock market and buying up municipal bonds or diversifying into cash or precious metals, here’s a few sectors of the markets you should consider for investing in 2021 and keeping your portfolio humming.
Infrastructure And Construction Investing
One area Biden wants to bring both public and private partnership into is infrastructure spending and building. If he’s able to get this item on his agenda done, construction contractors and building suppliers should see demand pick up and profit margins increase. For investors, they should consider buying stocks in companies like concrete and asphalt supplier Martin Marietta Materials that have a reliable supply chain and solid financials. But beyond the material suppliers, you should consider investing in construction equipment manufacturers such as Caterpillar Equipment. The real question is whether or not any of these companies are affected by any green energy policies that might slip through legislation or executive actions.
Healthcare Stocks Are Also A Buy
The most obvious investment opportunity you’re probably looking at is in the healthcare sector because of the race to put out COVID-19 vaccines and advanced treatment drugs, all of which are likely to give pharmaceuticals a boom. But the issue of healthcare was also central to the Biden campaign, so healthcare insurance providers and other health organizations also should factor into your investment strategy. One company that’s doing quite well in manufacturing medical supplies and equipment is Becton Dickinson, a company that’s had great management and done well with product distribution. Mass distribution will be a critical part of getting a vaccine out there in a timely manner.
United Health has been another name that’s come up in health firms that could prosper under a Biden administration. This is in part thanks to its solid Medicare plan enrollment programs, and this includes supplemental plans. Health insurance providers who are well-positioned to offer a variety of plans both for standard policies as well as Medicare might be worth the look, but you also have to be careful because healthcare and related services are always volatile with the continuous changes and government actions dictating it.
If you’re going to invest in energy in the upcoming year, that’s possible to do, but traditional oil pipeline and fracking companies may not be the best place to go. There are companies out there including NextEra Energy that have begun limiting fossil fuel consumption and are moving into more renewable energy for running their plants. The general Democrat push has been to get to net zero carbon emissions, and it’s likely companies that are morphing into pure green and renewable energy are going to get support from this administration. Solar panel manufacturers, electric vehicle producers, and other similar companies are looking at a good year for investing in 2021.
But what else should you know about investing and managing your portfolio? Should your income taxes or capital gains taxes be raised, you may want to look at moving investments into or around a Roth 401k or Roth IRA to maximize your savings and avoid the tax hit that could come to a regular brokerage account or even hit when you start taking distributions from a traditional 401k or IRA. You’ll want to balance your risks for sure, but you also need to look at investments that have high enough gains to offset potential inflation given the recent money printing during this pandemic.
Another way to maximize your investments for 2021 is to minimize broker fees, which is something you can do using a platform like Stash. Stash invest can be thought of as a platform that lets you invest your money your way. You can buy fractional stock shares, and get a feel for investing using Stash that doesn’t require you to be a Wall Street expert. Start using Stash invest and you can also use its checking account budgeting service.
A Quarter Richer is a personal finance blog with informative articles, clever tips and sound advice on making the most of your spending and finances.
