Top Investments to Consider in 2020

The year is fast coming to an end. If you haven’t considered investing before or would like to take even more advantage of making better investments, then now is the time to get all the right ideas and knowledge that would help you shape your finances in the new year.

When it comes to investing, a lot of people invest to make extra profit for many reasons—education, mortgage, wedding, vacation, etc., whatever the reason is the major purpose of investing is to create wealth. Compared to simply having a savings investing your money in a profitable venture helps you put your money to work and earn interests by the end of the investment tenure.

Luckily, there are many profitable platforms to invest your money in such as stocks, mutual funds, bonds, real estate, retailing, precious metals, and the likes.

 

Why Invest?

There are a thousand and one reasons to invest such as financial security or providing another source of income, but here’s one nice reason: to generate wealth. Through investing you have the opportunity of putting your money into profitable investment vehicles with high potentials of a good return rate. Notwithstanding, in investing lies the probability of losing your money if not done wisely. However, investing still holds lots of benefits some of which are:

●   Making your money grow over time; this has to be the deal with investing. It lets you put your money away for a stipulated time and your money back with interests when due. For starters, most companies offer investors a 10% ROI (return on investment) annually. The best way to let your money grow in investment is to opt for long-term investing.

 

●   Having a good retirement fund plan. Retirement would no longer be an issue of concern with investing. Consider it as a gift from the younger you to the older you by putting away some money in an investment vehicle and living off the returns when you’re retired. There are several firms that offer retirement plan services. Another way to plan retirement funds can be through stocks, bonds, or precious metals. Whichever you decide to go with, ensure that it is worthy enough to last a very long while.

 

 

●   Funding or expanding your business. There are many ways to fund a business—crowdfunding, grants, loans, etc. Investing is also a good way to singly fund or expand your business. On the other hand, the secret to most successful businesses is not only making other investments elsewhere but also pouring the investment returns into their own businesses. 

It is simply not enough to merely invest in a venture, having clearly defined investment goals would help you count the costs of your investment. Counting the costs includes calculating the possible risks and your willingness to still invest. It also includes deciding the amount you would like to invest based on your net income and your financial foundation. That is, no outstanding debts and having an emergency fund back up elsewhere. Basically, having your finances planned out in such a way that the money you decide to invest or put away does not affect your overall financial health.

Other reasons for investing include;

●   Funding your education

●   Portfolio diversification

●   Saving on pretax (lower your taxable income)

●   Starting or cofounding a new venture

Investments to Consider in 2020

To encourage investing among Americans and foreigners resident in America, the U.S. government under the Department of Commerce (International Trade Administration) initiated ‘Invest in America’ on March 7, 2007. The initiative’s mission is “to promote the United States as a destination for inward direct investment, also known as foreign direct investment.” This initiative is beneficial to large companies, large investors, foreign investors, and low-income investors likewise, as it ensures that public-traded companies meet up to certain requirements that make their businesses profitable and investment-worthy.

#1: Stock market

 Investing in the stock market offers a lot of advantages such as investment gains, diversification, part ownership, and dividend income to its investors though it also comes with its few disadvantages. High investment amounts and long-term investment tenure have more potentials of fetching greater returns. Though stock investment may not be as “juicy” as the news makes it, it still holds a lot of benefits if done properly. The major issue with investing in stocks usually has to do with individual emotions—the internal battle between whether to hold shares or sell them. It also has to do with greed or fear of the investors.

Mitchel Bloom, author of The 8 Biggest 401(k) Mistakes and How to Avoid Them, captures the emotional concern of stock investing as “emotions can hinder a good investment plan in good market environments, whether you’re experiencing a bull run where the markets are up, or a bear market where the markets are off 20% or more from their highs.

The emotional aspect of stock investing has caused quite a few investors to take up a dollar-cost averaging as a means of investing. That way, they contribute a particular amount of money every month which places them at an advantage when the prices decrease.

 In late 2018, global markets experienced a free fall until a change occurred which caused some indexes to hit all-time highs in late December 2018. The U.S. stock market has proven to be a reliable investment vehicle. As 2019 comes to a close there has been a 24.2% increase in the S&P 500 index SPX +0.06%, and a 28.6% increase in the Nasdaq Composite Index COMP -0.15%. An impressive performance that can only be matched by high-performance markets such as Russia and Romania which gained over 30% increase by the close of the year. In the last decade, the U.S. stock market has operated a bull market and has remained one of the top global markets.

The best way to get the most out of the stock market is by first getting a good knowledge of how the market works and studying past trading patterns to know when to buy and sell shares. If you’d rather not buy individual stocks you can opt for low-cost index funds. Another way of getting the best out of stock investing is by increasing the amount of money in your 401(k) which in turn decreases your taxable income and generates more wealth for you. Your taxable income can yet be reduced by investing after-tax dollars in Roth IRA which accepts up to $6,000 while the 401(k) accepts up to $19,000

 

#2: Real Estate

 The next most profitable investment option after the stock market would be real estate. “Real estate investing involves the ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development.” Investing in real estate is a great way to diversify your portfolio asides stocks and bonds.

Real estate offers investment opportunities to both high-income and low-income individuals. Most real estate investors would rather invest through real estate development trusts (REITs) than own actual real estate assets or properties. However, the returns gotten from REITs cannot be compared to the returns gotten from owning actual properties. Investing through REITs is recommended for new investors especially low-funds investors. Similar to stock investing, REIT investing allows investors to directly invest in commercial real estate by buying stocks of the REITs and earn income. The investors also receive dividends. There is no one particular real estate option for REITs as some REITs invest in mortgages and property while others simply invest in apartment complexes, office buildings, retail stores, or warehouses. In as much as REITs specialty differs, some experts have stated that it is not ideal for novice investors to opt for the REITs that offer mortgage investing because of their “volatility and they are not as easy to understand.” Besides REITs, investors can also consider investing through mutual funds or equity trust funds (ETFs) which are mostly done through brokerages.

Still, if you would still like to invest in real estate without getting involved in all the big investment stuff, you can stick to other options such as renting out a room in your home or wherever (so long as you own it), buy a rental property, or crowdfund a real estate investment with other investors and split the profits.

 

#3: Agriculture

 Studies have indicated that agriculture investing is a low-risk investment that increases in value over time and most likely not affected by the recession. Like most contemporary investment opportunities, agriculture investing provides its investors with options, you can either own an actual farm, invest via farm REITs or simply crowdfund a farm and split the returns when due. Farm REITs operate by purchasing farmlands and leasing them out to farmers. Similar to conventional REITs, through farm REITs agriculture investors can co-own farms without doing all the ‘dirty work”. Investing through farm REITs offers the investor many benefits such as partly owning a farm, and diversification which can come about by investing in multiple farms at the same time. Another benefit of this investment is its high liquidity as investors can sell their shares on stock exchanges. The minimum investment amount is one REIT share.

Another way to invest in agriculture without owning a farm is through mutual funds. Mutual funds agriculture investment is majorly divided into two—direct farming and agricultural produce. Some mutual funds firms specialize in funding the farming process while others specialize in funding the preservation, distribution, and production aspect of agriculture. The options of agriculture investing are diverse as investors can yet opt for investing in farmers through equity or ETFs.

The benefits of investing in agriculture include:

●   High yield/ returns

●   Principal pay down

●   Increased value through forced equity

●   Land appreciation over time

 

 #4: Peer-to-Peer Lending

If investing in stocks or real estate doesn’t interest you, peer-to-peer lending is another lucrative investment vehicle. Just like traditional banks, you can loan money to individuals through lending platforms and receive an interest in return. The interest rates can 5% and more, depending on the amount you are lending and the risks involved in the investment. Different lending platforms offer different investing amounts; some go as low as $25 yet an amount that low wouldn’t fetch you so much interest unless it’s multiple investments. Other platforms take $1000 as the starting amount. Also, the lending platforms are sometimes restricted or operational in only selected jurisdictions. They only operate where their primary markets are, so, if considering this type of investment, you may want to look for licensed lending platforms operational in your state.

 

#5: Your business

 Every good business person and investor understands that the best type of investment is investing in your business as well. Perhaps you do not have a business or a company, but you have a side-hustle or career. Every business needs to grow to become successful and to generate more revenues. The growth and success of your business not only depends on customer patronage but also the investment you put into it (funds and time). You have to spend money to make money. Investing in your business can take up any form whether it funds, extra time, outsourcing tasks, or hiring the best instructors to train your employees whatever extra efforts you put into making your business successful is an investment. Another perk about investing in your business is that it opens the door to other investors. No one wants to put their money on a ground that isn’t fertile. Except for a few philanthropic investors who aren’t really interested in your money per se but majorly interested in seeing your business grow, most investors would only invest in a venture that would fetch them good money at the due time.

 

Other investments to consider in 2020

●   Money market

●   Certificate of deposit

●   Treasury securities

●   Municipal bond funds

●   Short-term corporate bond funds

●   Government bond funds

●   Savings account

●   S&P 500 index fund

●   Nasdaq 100 index fund

●   Growth stock funds

 

Companies to consider investing in

●   Amazon.com

●   Netflix

●   Google

●   Berkshire Hathaway

●   The Walt Disney Company

●   Apple

●   Tesla Motors

●   Toyota Motor Corporation

●   Pepsi

●   Starbucks

 

Conclusion

Investing is a great way to generate extra income and build wealth over time. As more companies and businesses emerge investors are opportune with a wide investment scope. Every investment has its risks and returns rates which may differ from company to company due to the nature of the business, as an investor it would only be wise to run a quick check on the companies you would like to invest in to study their financial patterns over time before committing your money. If you were not so sure about investing before, now is the right time to start. 

Investingport owns Berkshire stocks, Amazon stocks, and Disney.