As states like NSW begin opening up and international travel beckons from December, it’s time to consider how you can cash in on what promises to be a COVID recovery boom.
What opportunities are out there? How can you capitalise on those opportunities? We take a look at different ways to invest for the end of the pandemic.
Everyone knows that Australia’s property prices are rising. But today, the regulatory authority on loans issued restrictions meaning loans will be down 5 per cent or up to $50,000 on a million dollar mortgage. So fewer will be in the market.
Meanwhile, more property is rushing to market this spring to beat any downturn.
That means there will be a drop in some prices. This could be a buying opportunity.
Now is also the time to buy an investment property. Domain research has found that fewer properties are sitting vacant.
With vacancy rates lower than this time last year, now could be the perfect time to invest in property because you’re almost guaranteed a rental income. Domain’s Chief of Research and Economics, Nicola Powell said that vacancy rates were likely to fall even further as Australia comes out of lockdown.
When borders are reopened and overseas migration from international students and workers return, demand and prices are likely to increase, especially in Melbourne and Sydney, where the vacancy rate is higher than in other cities.
High property prices are also leading to Australians renting for longer, which is having an impact on vacancy rates. The time it takes to lease a property is an average of 16.2 days, so if you’re looking for a passive income, now’s the time to buy an investment property.
Even as an owner-occupier, with interest rates at an all-time low, it’s much better to pay your mortgage than someone else’s and to have immunity from rental increases.
During the height of the pandemic, a lot of people lost their jobs because of the lockdowns, but that looks set to change as NSW and Victoria look to re-open later this month. Job ads in hospitality, retail and tourism have increased six per cent, which is up on the previous month.
It may be that the jobs advertised are those that were lost when the sectors were forced to close because of COVID-19 restrictions. At the height of the pandemic, 166,000 job losses, or 68 per cent of casual workers lost their hours between May and August.
Seek has reported that job ads are up six per cent on the previous month and almost 57 per cent compared to the same time last year.
Seek ANZ Managing Director, Kendra Banks told Business Insider that the figures indicate that the market has rebounded and is returning to pre-pandemic hiring practices.
What’s even more promising is that job ads are up 24.7 per cent nationally than in 2019, so it may even be that the economy has rebounded stronger than ever.
The hiring boom could also be a result of Federal Treasurer Josh Frydenberg’s comments that income support measures will be phased out two weeks after each state and territory reaches 80 per cent adult vaccination rate.
It’s not just hospitality and tourism that’s hiring. A few weeks ago Dan Murphy’s and BWS announced they were hiring 4,400 staff across all of their stores. The majority of the roles will be casual and offer a minimum of 20 hours per week and many are offering an immediate start.
The recruitment drive starts this week with 1,200 roles on offer in NSW, just under 1,000 in Victoria, over 900 in Queensland, just under 400 in WA, 250 in South Australia, 75 in Tasmania, 60 in the ACT and 30 in the Northern Territory.
If you’re looking for a passive income stream then shares are a great option whether you’ve got $5,000 or $25,000. Of course the more money you have to invest the better because then you can diversify your portfolio but even if you’ve only got a few thousand dollars to invest now, the Motley Fool recommends the following shares:
Nitro Software Limited (ASX: NTO) is a document productivity company that has been experiencing strong growth in recent years and is expected to continue growing over the next few years. Given an increase in remote working and an investment in sales staff there is huge demand for its software. It currently costs $3.62 per share.
REA Group Limited (ASX: REA) is a strong performer in real estate listings in the Australian market and has a number of other businesses. It’s expected to enjoy further growth in coming years as a result of the booming housing market, cost cutting, price increases and new ventures. It recently acquired Mortgage Choice which has strengthened its place in the mortgage broking market. It is currently priced at $153.11 per share.
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
VanEck Vectors Video Gaming and eSports ETF provides investors with market exposure to companies in the video gaming market including Activision Blizzard, Electronic Arts, Roblox and Take Two. These companies are positioned well to enjoy growth because of the growing popularity in video games and eSports. It could be worth holding for a long time. Currently it is priced at $10.53 per ETF unit.
As the economy grinds back into action and office blocks come back on stream, energy will be in huge demand. Energy stocks have jumped ahead of all other sectors in the past month. Energy stocks have soared 19.3 per cent since the start of September, spurred on by a rally in locally listed energy giants.
Whether you’re close, or a long way from retirement, it’s worth considering investing in your super. In addition to increasing the possibility that you’ll have a comfortable retirement, there are also tax benefits to investing into your super.
When you make additional contributions into your super fund they are taxed at 15%. This is lower than your marginal tax rate so you’re getting a double benefit of paying less tax and increasing your retirement savings.
If you’re risk averse then cash savings are your best option. Before you choose a bank to deposit your cash into, it’s worth shopping around for the best possible rate. You should also be prepared to switch in case another bank offers a higher interest rate on your cash. Although savings interest rates have been in free fall for years, COVID-19 has led to more people reducing their spending and keeping their money in savings accounts.
According to comparison site, finder.com.au, Virgin Money offers the best interest rate for over 25s, at 1.5 per cent, followed by Rabobank at 1.35 per cent.`