3 Reasons 2021 will be a huge year of growth - Finness Advisory

3 Reasons 2021 will be a huge year of growth

We all want to forget 2020 but it’s hanging on like a piece of gum stuck to your foot. But the good news is that 2021 is looking fantastic and I want to share with you my three reasons why 2021 is looking so good and how to best position yourself for the sling-shot recovery right now…

 

Well let’s quickly reflect on 2020; we had drought, bushfires, Covid-19, biggest recession in 30 years and a US Federal Election- it doesn’t get any more tumultuous than that! Unemployment in Australia hit multi-year record highs and some industries were completely obliterated forcing massive lay-offs and government intervention in the form of fiscal policy (JobKeeper) and monetary policy (lower interest rates) support to flood the country with money whilst we fought the virus.

 

So why the heck would 2021 be so good?

 

Well, before we touch on my top 3 reasons 2021 will be great, let’s begin with the end in mind.  If conditions are going to be strong, what do we need to do now to be best placed for the recovery?

  1. Planning– start planning for a strong year and sit down with your team of advisors to discuss how you can take advantage of stronger economic conditions including a rising share market, stronger property market and household budgets largely full of cash.
  2. Action– once you’ve done your planning you need to ensure you execute on your plan. Execution is the key to success because if you know what you need to do and don’t do it, it’s just a dream. Universities are full of smart people with great ideas that don’t execute- don’t be one of them!
  3. Review and pivot– once you’ve executed your plan, you will need to review and pivot where required. Change and innovation make a good plan great!

 

Now we’ve covered the important bits, let’s look at why 2021 is looking super strong.

 

Reason No. 1 – Don’t fight the Fed

My number 1 reason that 2021 is going to be a great year is the basic share market tenet; “Don’t fight the Fed”. The Reserve Bank of Australia have lowered interest rates to a record low of just 0.1% and created perfect conditions to flood markets with cash.

 

Mortgage rates have dived and so have borrowing rates for business. In simple terms this means that people will have more money in their household budgets and thus more to spend on economic activity. This in turn affects confidence and consumer confidence will rocket from a low point to a high point fairly quickly.

 

Low interest rates are inflationary.  This means that asset prices will rise, and probably sharply.  It’s already happening to share market prices and house prices as auction clearance rates rocket past 75% and the share market has jumped more than 10% in the past week or so.

 

So, don’t fight the Fed!

 

Reason No. 2 – The Vaccine is on its way!

With a vaccine comes confidence and with confidence comes spending to fuel Reason No 1 even further. Whilst the vaccine roll out won’t be immediate, it will have a universal affect on confidence.

 

Both Pfizer and Moderna are well advanced in their development of human trials.  Further, they’re both showing well over a 90% efficacy rate on their vaccines so it’s really going to be a two horse race to the finish line. Demand? Well there’s not a human on the planet that won’t be interested in what happens next.  Even the anti-vaxxers will be watching this one closely but most importantly, even before the rollout starts, confidence will sky-rocket and so will global economies.

 

From Wall St to Main St will benefit, and that’s you, the business owner.  So, you need to be well prepared for a world with more cash and rapidly rising demand fuelled by low interest rates and generous government spending.

 

 

Reason No. 3 – There’s a lot of cash on the sidelines

Even though cash rate returns on term deposits and cash accounts have been ridiculously low, people have chosen cash over stocks and property to sit out the Covid lockdown. This has been evidenced in the share market where a vacuum in cash created one of the largest and fastest falls in history akin to the 1930 Depression crash.

 

That cash is now ready to be deployed. Owners of cash have been awaiting signs for the clouds to clear so they can get back in the game and start investing again.  Warren Buffett, the world’s most successful and wealthiest investor recently dropped close to $10b on stock purchases symbolising further confidence in a rising share market that’s now breaking records.

 

So, if you want to get your business set for 2021, then make sure you book an appointment with me to discuss how we help your business grow in 2021. Just click on the button below and we can have a chat about how trusted advice can help grow your business.

 

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