The year 2020 should provide plenty of opportunity for growth investments to thrive. Here are the top 5 best investment ideas in 2020.
Investment means a plethora of different things to different people.
It can bring you peace of mind in retirement or a stable source of income. Many people leverage it to spearhead wealth growth and boost their purchasing power.
The only problem is that achieving these goals is no walk in the park. There are no easy answers to million-dollar questions or shortcuts to financial glory.
The wise thing to do would be to take a deep breath.
The first thing you’ll want to do is get your priorities straight and assess your risk tolerance. Figure out the investment time horizon you’re comfortable with. Having sorted that out, you can start pursuing the best investment ideas.
This guide will give you a clear idea of where to start the hunt. We present you with a set of lucrative opportunities for 2020 and beyond.
- Government Bond Funds
Government bond funds operate like mutual funds that deal with debt securities.
As the name suggests, they focus on securities issued by the US government, as well as its agencies and sponsored enterprises. One can find a variety of debt instruments here.
We’re talking about mortgage-backed securities, T-notes, T-bills, T-bonds, etc. Note that these instruments may have a short, intermediate or long-term character.
We would argue that this investment strategy is best suited for risk-averse people. Namely, securities are backed by the government, which means they represent one of the safest investments there is. They’re certainly tempting to novice investors and those looking for steady cash flow.
Some risks do exist, however, and they are worth evaluating. You mainly have to worry about inflation and interest rate swings. They affect purchasing power and bond prices respectively.
Head to websites like Treasury Direct to discover bonds you can invest in.
- Growth Stocks
Stocks remain the bread-and-butter of most successful portfolios.
Growth stocks are some of the highest-flying targets with an immense allure. Those who play their cards well could enjoy returns of 20% and more.
Most growth stocks are tied to tech startups that are about to take off. In other words, new players that are poised for explosive sales and profit growth. Notice these companies rarely offer cash distributions.
Instead, they reinvest cash in businesses to spur more growth.
Another thing to remember is there’s considerable risk associated with this option. It stems from high volatility and a lack of any guarantee against losing all your money.
The trick is to do your homework and do it diligently. Only in-depth analysis can reveal growth stocks that are truly sound.
Intermediate and advanced investors should have trouble nailing these tasks. On the other hand, unseasoned prospectors need to think twice before choosing this option.
- Online High-Yield Savings Accounts
Next off, we have an accessible cash vehicle— high-yield savings accounts.
Unlike regular savings accounts in physical banks, online overheads are quite low. Interest rates tend to be higher too. It’s not uncommon for accounts to yield more than 2%.
If you seek easy access to cash sooner rather than later, this tactic does the trick. Another selling point is the fact you can’t lose your deposit.
This is because high-yield accounts are insured by FDIC and are as liquid as accounts get. Hence, they are a very safe parking lot for your money.
Alas, inflation proves to be a menace once more. It has this unnerving ability to gradually eat away at your reinvestment returns. You need to keep up the pace with its rate to minimize the risk.
Bear in mind as well that federal regulation restricts the number of possible withdrawal transactions. In the US, you can make a total of six per month.
- S&P 500 Index Fund
If growth stocks aren’t your cup of tea, but you still crave high returns, this strategy is tailored to you.
S&P 500 Index Funds feature 500 leading companies in the US. One of the chief advantages is immediate diversification. Technically, you can get a slice of every company from the coveted list.
And make no mistake — these business champions exist across a wide array of industries. Such a level of diversification makes your portfolio more resistant to shocks and risks.
On top of that, returns are more than respectable. Many investors manage to score around 10% annually. Did we mention the expense ratios are low?
Yes, it’s another benefit that speaks in favor of S&P 500 Index Funds.
Beginners looking for broad exposure to the stock market can hardly go wrong with this one. The only drawback is heightened volatility, which exceeds the one related to bonds and bank instruments.
- Real Estate Investment
The ecosystem of real estate is teeming with amazing opportunities.
First of all, you can opt for real estate investment trusts (REITs). These companies own and manage income-producing properties for you. You just have to buy into the trust to receive dividend payouts.
There’s no need to bother with tedious management tasks related to owning a property.
Of course, there are many other ways to establish a foothold in the industry. You can get in touch with various specialized companies and online platforms. They help you gain access to real estate investments through co-ownership and direct investment.
Therefore, your job is to select the best investment avenue and tactic. Then, pick the type of property you wish to add to your portfolio. Ponder rental property, lodging apps (Airbnb), house flipping, and other approaches.
The dilemma usually boils down to the question of whether you actually want to buy the property or not.
Time to Capitalize on the Best Investment Ideas
Like it or not, there are no one-size-fits-all investment solutions out there.
The pathway to success is dotted with hurdles. So, set your financial goals and determine desired returns. See what the amount of money you can afford to invest and possibly lose is.
Weigh all the pros and cons of the best investment ideas before embarking on a spending spree. Prioritize digital and real-world opportunities that fit your risk and investment profile.
Remember that building a diverse, well-rounded portfolio is the best way to future-proof your investments.
Check out our top posts to gather some more actionable tips and insights. Knowledge is power and holds the key to hitting it big in 2020.