The Best Investments for 2020
Learn trends, best stock market & income-producing investments & the best industries to invest 2020.
To provide for your future, you need to fine-tune your investments now.
Investing well can help you build wealth, create a powerful income stream, and fund your retirement – but to achieve those goals as planned, without adding undue risk, you need the right strategy, the best investments, and time.
Poor investment choices, on the other hand, lead to underwhelming results. And it matters.
Essentially, investors can’t waste time – or money.
What are the best investments, who offers the best solutions, and where can you find someone who will work with you one on one to help design your overall investment strategy?
It depends on your financial goals, your timeline, and your appetite for risk.
Select a money goal below to see a curated list of investment options and a select group of specialists ready to help you get started.
And beyond that, here’s more information about the particulars: the best investments for your money, what to consider as you weigh investment options, how to create your strategy for growth and tips to help you execute successfully.
Extreme market volatility, such as occurred in the first months of 2020 due to the coronavirus crisis, reminds investors that investment gains can be lost in an instant.
If nothing else, this demonstrates how important it is to understand your investments so you can make effective decisions about them.
What to Consider
Fine-tuning your investments involves finding the right balance between two factors: your time horizon and your appetite for risk.
Generally speaking, as your time horizon gets shorter, you become less tolerant of risk.
And there’s quite a variety of investment choices available to investors – everything from CDs and money market accounts on the safe side to medium-risk stock funds to high-risk penny stocks and crypto-currencies.
Here, investment variety is a good thing. It makes it easier to create a diverse portfolio that provides suitable returns while also minimizing exposure to risk.
What is Your Risk Tolerance?
Every investment involves an element of risk. You can’t avoid risk altogether, but you can manage it.
Deciding how much risk to accept is a personal decision that takes into account your time horizon and your risk profile – basically, whether you would adopt a conservative or aggressive approach to investing at any given time.
The conservative investor may be closer to retirement and, as a result, tends toward low-risk investments that help preserve capital. The conservative portfolio may include a larger percentage of CDs and other FDIC-insured accounts that won’t lose principal in a volatile market.
The aggressive investor, on the other hand, may have a longer time horizon and thus be more comfortable with high-risk investments. The aggressive portfolio may include higher percentages of stocks that provide a better return.
Overall, your asset allocation should align with your short-term and long-term goals. As you get closer to retirement – or whatever goal you’re working toward – your risk tolerance changes, and you’ll need to fine-tune your investment mix again to reflect your situation.
Popular Investment Strategies
An investment strategy is a set of rules – your game plan or style of investing, if you will – that guide how you pick your investments. There are many types of investment strategies, but you should find one that works for your objectives.
A growth investing strategy focuses on fundamental analysis of the financial statements of a business and understanding the factors that position it to grow over time.
Value investing is a strategy that Warren Buffet follows. It’s designed to identify stocks that are underpriced.
This strategy looks for stocks that pay dividends or provide income on a regular basis.
Dollar Cost Average
Dollar cost averaging tries to reduce the impact of market volatility on your investments by dividing the amount of money being invested on a regular basis equally.
Designing Your Strategy for Growth
Designing an investing strategy to achieve your financial goals is a lot like how an athlete prepares for the Olympics.
To win, you work with a battery of experts, use several machines, and depend on various products that optimize your health and ability to compete.
It doesn’t happen overnight, and not many who go it alone successfully take the gold medal.
The same can be said about investing. Most people know they need to start saving for retirement, but few understand how to make their money grow.
Enter your financial team – the bankers, the stockbrokers, and the financial advisors who can help you pull it all together into a cohesive plan.
You’ll want team players who can help guide your research, explain your options and work together to help you execute on your strategy.
Don’t underestimate the value of putting together your financial team early. The point here is that there’s no time to waste.
Executing on Your Strategy
Having a financial team in place doesn’t mean you aren’t actively learning how to invest in stocks, bonds, real estate, and other types of investments on your own.
It just means you can get further faster by leveraging their expertise.
As you plan your overall investment strategy, you’ll want to consider which products are best suited to the time horizon for which you’re investing:
Short-term investments (1- to 5-year horizon)
- Certificates of deposit
- Money market accounts
- Bond funds
- Balanced index funds
Long-term investments (10-year horizon or more)
- Index funds
- Real estate
Your mix of investments should reflect your tolerance for risk – and should be housed in tax-advantaged investment accounts such as an Individual Retirement Arrangement (IRA) or a 401(k) to allow for maximum growth.
How to Pick Cash Equivalent Accounts
Cash equivalent investments are among the most liquid in your portfolio, are generally low-risk and provide comparable returns as a result. These accounts are often used for short-term objectives such as staging and housing funds in between investments.
- Savings accounts
- Certificates of deposit (CDs)
- Money market accounts
When selecting a cash equivalent account, it’s important to find one you can trust to consistently offer the highest rate. Look for banks that commit to competing for your business by offering the best interest rates and no fees.
For certificates of deposit, also optimize the interest rate (APY) to the length of the term (how long your funds must be on deposit). Then compare options like no early withdrawal penalties and understand how taxes affect your return.
Reassessing and Monitoring Your Strategy
The best investment strategy not only maximizes the return on your investment and minimizes the risk to your principal, it also evolves.
In order to reach retirement – or whatever financial goal you set – you need to monitor and reassess how effective your investment strategy is at meeting new economic challenges, especially in light of the fact that your time horizon is always getting shorter.
Modeling financial options with the aid of a retirement calculator can help give some perspective about different opportunities as they present themselves. Stress-testing your finances can help you plan and protect your wealth. Comparing your investment returns against inflation is an effective way to assess your strategy.
The need to remain actively involved in your investments may add a new level of complexity to your financial life, though – which is another reason investors seek out competent financial advisors to help them adjust and find the best course of action at every turn.
Besides, it’s not like you simply adopt your investment strategy and let every other aspect of your finances fly unattended to. As you get further into investing, for example, you’ll still be managing your cash flow, minimizing expenses, maximizing your income and monitoring your investments.
So it’s a lot to do. But people are out there making money – right now.
If they didn’t just pick the right numbers or bump into Warren Buffet’s cousin’s hairdresser at a Rotary meeting in Nebraska, it might be they had a plan.
Chance meetings aside, fortune favors the prepared.
And when it comes to how to save money, the best way to invest money, and how to manage your finances so your money continues to grow, you might not necessarily have time for trial and error.
You can do it yourself, of course. But with access to the right team and information from the beginning, making your money grow becomes more of a certainty than a concern.