- ASX rose by 47% from its 2020-bottom mark, indicating strong resilience of the market.
- ASX houses a variety of companies of different sizes and caters to diverse markets.
- Equity investment can act as an high-return alternative to conventional investments in the current low-inflationary settings.
Pretty soon, the world is going to move ahead from one of the most banal years of the century, when the life largely seemed to be cooped up at homes amid COVID-19 pandemic fears. The quest for growth appears to be driving many investors to look for investments that not only acknowledge the monumental transition but also seem to bring bundles of hope for significant portfolio return.
In the current pursuit to mitigate risk while maximising its return, ASX appears to be the buttress, allowing the investors to sail through effectively from the losses incurred.
Cutting corners, let us quickly look at key reasons why one should invest in ASX in the upcoming year.
ASX Bucked the Dismal COVID-19 trend
The passing 2020 was crammed with COVID-19-led unwanted upheavals that brought lives to a standstill and knocked down the growth momentum of the economy. Be it the national GDP, company’s output or personal income, all met with severe setbacks amid the pandemic scenario. Nevertheless, ASX managed to come out of the woods fast enough.
As on 29 December 2020, although ASX 200 gave -0.29% YTD return, it has risen by 47% from its 2020-bottom mark. It points at the huge market resilience and strong investor’s trust even during the toughest scenario. The current upbeat momentum of the Australian economic scenario could further prove tailwind for ASX movement.
Diversity in Investment Options
Varied investors may hold different motivations and risk-averseness towards their investments, depending on their income sources, obligations, age factor or cognitive setup. ASX seems to offer a one-stop answer for a plethora of needs of the investors.
It offers small cap and blue-chip stocks targeted to growth investors and risk-averse investors, respectively. ASX has a variety of companies dealing in technology, healthcare, retail, utilities, gold, and other commodities. The diverse nature of the companies, their sizes and markets offer varied investment options to the investors.
Superior Returns over Conventional Savings Methods
While the low-interest scenario of Australia seems conducive for getting the economy out of troubles, it might not favour returns on investments. Notably, conventional methods such as bank savings seem insignificant to offer sufficient returns. However, equity investment can prove helpful in maximising the value of returns, especially for the growth stocks having substantial growth potential.
At the same time, ASX has dividend stocks which cater to the need of consistent income for many. It could ensure periodic income in the form of dividends even in the volatile scenario.
The ASX stock market is yet to become a la-la-land for ambitious investors as the pandemic continues to trouble the world. However, turning a blind eye to the positive developments in Australian economy in the name of risk-averseness may not be prudent at the same time.
ASX, which has shown strong resilience post pandemic onset, seems to have stayed ahead of the curve, generating significantly higher returns, and beating the pessimistic setting.