Finance

2021 was a great year for investors: almost everything went up

All in all, it wasn’t that easy to lose money investing last year, unless you just had those few wrong stocks, or were in bonds, or you had a lot of money in the bank.

Good stock year

Just like in 2019 and 2020, the stock market went well last year. The AEX index, the most important index of the Amsterdam stock exchange, rose by 27.7 and 28 percent. There is also a few percent dividend yield on top of that.

The medium-sized (Midkap index, +15.7 percent) and small listed companies (Small cap index, +20.7 percent) also performed well.

Tech and raw materials

The fact that the AEX rose more than the Midkap and Small Cap Index is partly due to the fact that a number of tech funds are included in the AEX, and 2021 was again a more than excellent year for tech. Especially in the first nine months of the year, tech did well.

In recent months, investors have become more interested in stocks that can benefit if commodities become more expensive, such as Shell, says RTL Z stock market commentator Hans de Geus.

Heavyweight Shell is on the list of climbers in 2021 in place 12, with a plus of 32 percent. ArcelorMittal even seventh with a plus of 49 percent.

Chip funds

Among the tech funds, the price of ASML, which by far counts most heavily in the calculation of the AEX, gained 77.8 percent. ASMI was the biggest climber with a plus of 116 percent. Both ASML and ASMI make chip machines with which chip manufacturers such as Intel and Samsung produce chips.

This also applies to Besi (+51.3 percent), which also contributed significantly to the profit of the AEX index. Due to the success of the Dutch tech companies, the AEX did slightly better in 2021 than the broad American stock market index S&P 500 and better than the Nasdaq index from the US, and to think that the Nasdaq consists entirely of tech companies.

Prosus and Just Eat Takeaway

Only five of the 25 AEX funds lost ground in 2021. It is striking that two of these are tech funds: Prosus (-16.8 percent) and Just Eat Takeaway (-47.5 percent).

That they went down has specific reasons. For example, the value of Prosus is largely determined by the internet giant Tencent from China, which, like other tech giants from that country, is affected by the stricter rules of the Chinese government.

Just Eat Takeaway is suffering pressure from an activist shareholder who wants the company to sell the newly acquired Grubhub in the US again.

Bank shares

Banks are among the listed funds that did well. For example, ING rose by 60 percent and ABN Amro (which is now in the MidKap index) even by 61 percent in 2021.

Jerome Powell, the chief executive of the US central bank (the Fed), expects three rate hikes in 2022. The ECB will buy less bonds and some analysts expect the first hikes in official interest rates in the first quarter of 2023. Higher interest rates are good for banks.

crypto

You could also earn well with crypto coins last year. For example, the price of bitcoin, by far the most important crypto currency, rose by 63 percent in 2021.

The price of ether even went over five times and holders of binance coin were completely sold with a more than fourteenfold increase in the price.

Housing market

Homeowners were also well off this year. For example, the prices of existing houses were no less than 20 percent higher in November than in the same month of a year earlier.

The average price of a stock owner-occupied house in our country is now more than four tons, which means that when measured in euros, the price increase is a substantial amount. The owner of an ‘average home’ became about 67,000 euros richer on paper in a year’s time.

bonds

What didn’t sit well with you in 2021: bonds. The market interest rate on ten-year government bonds rose on balance this year and the price of bonds is inversely proportional to the interest rate. This means that if interest rates rise, the price of bonds falls.

You lost more than 3.5 percent on Dutch ten-year government bonds this year. This consists of the exchange rate loss plus the negative interest.

Negative interest

Finally, your savings account. You barely get any interest on your savings. For example, you received 0.01 percent interest at ING and Rabobank up to an amount of 100,000 euros and nothing at all at ABN Amro. And ING will cancel the interest for the balance below 100,000 euros as of 1 January.

At ING and Rabo you now have to pay a negative interest of 0.5 percent on the amount above the ton and at ABN Amro above 1.5 ton (as of 1 January 2022 that will also decrease to one ton).

And to think that the interest that you get, if you get it at all, won’t make up for inflation by a long way.

Many consumers therefore started investing in stocks, or they bought cryptos such as bitcoin, and as said in 2021, that was not a bad choice.

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