My Investing Strategy for 2021

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Hey guys, welcome back to the channel! We are so close to being finished with the new money advent calendar; it is ridiculous. Happy Christmas Eve! Here we go, the 24th of December 2020. Only one more video after this one to go, and we are done for the new money advent calendar.

So, first of all, thank you to everybody that has tuned in every day of December to watch a piece of content from me. I really appreciate it! In this video, we're going to be talking about how I'm going to be looking at my own personal investing strategy and how it's going to change in 2021.

So, some bits of course will be the same; other bits, they're going to be changing up a little bit. I hope you enjoy this video! Leave a like on it if you do; I would sincerely appreciate it. But for now, let's get started.

Now, if you watched my video from the other week where I spoke about my financial goals that I'm trying to achieve in 2021, you will have noticed something a little bit peculiar. That is that right now, I'm currently holding about 70 percent cash, which is incredibly high. If you're an investor, I certainly—especially a stock market investor—don't recommend that you hold 70 percent cash, because at the end of the day, cash is trash over the long term.

But there, of course, is a very specific reason why I am holding such a high level of cash, and that is going to be a new part of my investing strategy in 2021, which is I'm going to buy a house. So, I'm just simply reducing my market risk at the moment so that I can, you know, no matter what happens in the market over the next couple of months, I will still be in a solid position to actually achieve that goal of buying a house in 2021.

So, that's the first step of my investing approach for next year: in the next eight months or so, sometime in the next eight months, I will be buying a house, most likely. Obviously, who knows? Never say never, but I do definitely believe I'll be buying a house in the next eight months.

Now, this won't strictly be, you know, an investment property. This is going to be a home that I will live in. But, you know, I still do classify that as an investment. You know, especially here in Australia, we've got a lot of things going for your main residence. Like, obviously, if you hold it for a long time, you'll get that capital growth over time.

Also, one thing that you have to consider in Australia is that your primary place of residence, your home that you live in, is free from capital gains tax. So, people can actually make a decent amount of money from the home that they buy to live in for themselves.

So, I actually do think it's quite a large investment decision, even though a lot of people don't necessarily think of their home that they live in as an investment. Because, you know, it doesn't produce cash for the most part, it will take cash out of your pocket. A lot of people see it as a liability, which I totally understand. But I definitely do include it as an investment.

So, that is the first part of my investing approach for 2021: I want to try and buy a house. I will keep you guys updated on the channel, of course, as to how I'm going and what I'm looking at. So stay tuned for that coming through next year.

Now, the next part of the investing strategy that I follow is of course all of my stock market investing. Now, typically, I choose the approach of going 20 percent passive investing and about 80 percent active investing. These days, I'm much more of an active investor, and I believe that that kind of setup will continue into 2021.

So, I definitely do aim to continue to show up and invest in the ETFs that form a part of my passive investing strategy. For me personally, I like to track the ASX, the S&P 500, and the Global 100. So, I'll definitely keep showing up each quarter. That's what I've personally committed to myself: each quarter, I come back and I add to those positions.

Hopefully, over time, I can just get that general market return of about 7 to 8 percent. But absolutely, it is a relatively small part of my stock portfolio—the passive investing—but it is an essential part, in my opinion, of my own investing approach. Just in case, you know, the active investing that I do—where I think I'm some hot shot investor—actually turns out that I'm actually terrible! Well, at least I've got that foundation of passive investing that I know is just going to grow for the next 40 years.

I know that I've still got that as a bit of a fallback, so for me, that's still a very important part of my investing strategy, and it's something that I will definitely continue in 2021. I don't have any plans to kind of change what I'm already doing. I definitely am dollar-cost averaging, as I just spoke about before, and I do plan to continue to dollar-cost average into those ETFs to continue to track the market no matter what the market's doing throughout 2021 and beyond—for the next, I could just say that for the next 40 years.

And then lastly, we move on to active investing. Now, active investing, I still want to try and devote, you know, at least like 80 plus percent of my investing towards active investing. I'm really keen on active investing. However, whether that turns out to be the case in reality is a completely different question.

The reason for that is because obviously right now everything is super expensive, asset prices are inflated. It's kind of interesting because, you know, we've seen so much money printing and thus lowering of interest rates, and people have been kicking and screaming saying, "Well, what's going on? Why aren't we seeing inflation?"

It's important to realize that we actually still are seeing some form of inflation, but it's inflation in asset prices. So, we're not seeing inflation in the typical measure of the consumer price index. You know, how much does a loaf of bread cost? How much will it cost for the plumber to come around and fix my leaky pipe? We're not seeing huge inflation yet in those areas, but we still are seeing inflation; we've just seen it in asset prices—in stocks, particularly.

So, because we've seen this inflation and stock prices are very high, you can basically—well, for me, I know this is my experience—any company that's in my circle of competence that I've looked into at the moment is overvalued. Without fail, I haven't found one that's even close to fairly valued. So, that may continue; this situation may continue into 2021.

In which case, even though I'd like to put, you know, 80 percent of my investing cash into active investing, it might turn out that because we never buy expensive stocks when it comes to active investing, it might turn out that actually most of my investing next year is purely passive, because I just don't find those opportunities in the market to sink money in.

Remember, one of the key critical parts of the active investing approach is to make sure, even if the company is fantastic, don't pay a stupid amount for the company. Because, as I always say—I reckon I've said this at least like 30 times in the last month—a great company can turn into a terrible investment if you buy the shares at a price that is way too high.

So, I'd like to be a big active investor; I may not get that option. On the flip side, I might get that option. There might be, you know, this massive stock market correction or crash next year that enables me to find marginal safety prices and buy heavily in my active investing, in which case maybe 90 percent of my investing would be active if the opportunity arises.

But if, you know, if all things stay balanced and what I want to try and achieve, then about 20 percent will be passive, 80 percent active. But lastly, what I wanted to talk about is another goal that I've got for my investing in 2021. I reckon this is a goal that maybe a lot of people should think about, particularly while stocks are overvalued: don't necessarily just forget about your stocks.

So, don't forget about your watch list. "Oh man, I'm not even going to bother; I'll just wait until I see something on the news that the market's coming down, and then I might revisit it." I don't think that's a good play at all. I think that in 2021, my goal in particular—and I urge you guys to do the same—is to try and build on your circle of competence.

Try and, while everything that you're currently watching is too expensive to really pay super close attention to, try and broaden your horizons. For me personally, I wrote down what I'm trying to learn more about in 2021. So by the end of 2021, I'd like my circle of competence to include the following industries: electric vehicles, renewables, video games, social media, entertainment/media companies, and e-commerce.

I think that's my goal for 2021. Some of these industries I already know a lot about, some of them I know a little bit about, and some of them I really need to pick up my game. So, in 2021, one of my main goals is going to be to increase my circle of competence to include all of those different industries, so that I have more stocks that are on my watch list that I would feel comfortable with investing in if the opportunity arises.

Because what's the quote? Something about the best investor is the person who turns over the most stones. You've just got to keep looking, keep learning, keep broadening your horizons, and expanding your circle of competence.

But overall, that's really what I'm going to be aiming for in 2021 with my investing—going a little bit into property, but that's more of a personal thing to try and get to my financial goal of that financial launch pad. And then, of course, ideally, you know, 20 percent passive, 80 percent active. But depending on what the market does and what opportunities arise, that could easily change.

Overall, I'd love to hear what you guys are aiming to do with your investing in 2021. Of course, the actual strategies that I'm going to follow are exactly the same. Like, there's nothing—there's nothing changing with the way I look at passive investing; there's nothing changing with the way I look at my active investing.

All the stuff within each of those umbrella terms is staying exactly the same. It's just what am I going to be able to do? What opportunities am I going to get? But anyway, I want to hear from you guys. What are your investing strategies for 2021? Have they changed? What are you hoping that you'll be able to do next year in the markets?

I'd love to hear all that stuff from you, so leave a comment down in the comment section below. Leave a like on the video if you enjoyed! Check out Profitful links in the description if you want to learn about the investing strategies I've literally been talking about for the past 10, 15 minutes—both passive investing and active investing. Links down in the description if you're interested.

But that's it from me for today, guys! Happy Christmas Eve, and I'll see you guys tomorrow for the last episode of the new money advent calendar. Let's go!

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You.