Would you like to know the 11 best investments in 2020? This article is the ultimate guide that will enlighten you. So, let’s begin!
Recently, the term investment has been on everyone’s lips. The economy is at a crucial point now and people are looking for means to earn more money or what they can do with it to yield more instead of allowing it to lie there in a savings account.
But, before we go into detail on the best investments in 2020, let’s look at what the word “investment” really stands for.
Investment in any mechanism used to generate income for future purposes.
One of the best investments to venture into is by buying of financial products. You can invest in financial products like bonds, funds, shares, and annuities, while others might be through Real estate or Forex trading.
Best Investments In 2020
This is one of the most commonly used best investments methods and contrary to what you might think, these savings Accounts are not the regular ones you may have with the walk-in banks. This is the high-yield online savings accounts that, they are easy to create and requires very little effort to create, with fewer and non-existent cost on maintenance and card charges and you can have easy access to the money by transferring it to your primary bank account or card.
Here, your money is saved. You don’t have to worry about losing your money because these online banking are Federal Deposit Insurance Commission (FDIC) insured.
One of the advantages of using this savings account is that you don’t have problems saving and withdrawing money at any time.
According to Investopedia, real estate is “the physical surface of the land, what lies above and below it, what is permanently attached to it, plus all the rights of ownership—including the right to possess, sell, lease, and enjoy the land”.
It is the land, any improvements permanently attached to it.
Any day, anywhere, anytime, lands will always appreciate. Having this in mind, the vastness of the real estate community and their performance these past few years, it would be a good thing to take advantage of the market.
Real estate is of different types;
- Residential real estate
- Commercial real estate
- Industrial real estate
- Special purposes
These varying types of real estate are vast and lucrative enough for best investments.
Money Market Account
What is a Money Market Account?
This is a deposit account that allows you to save up your money. It is different from the regular savings account in the sense that it has a higher interest rate and requires higher minimum balances. It has restrictions on withdrawals which limits the number of times money is withdrawn from it.
Treasury Securities as they are mostly called is among the best investments and also one of the safest ways of investing your money. This is because they are used to paying for debts and projects of the government.
Treasury Securities are of different types. Treasury bills being one of them are sold at a discount from their face value, but as they reach their maturity date, you will be paid in its full face value. This means that your profit will be the difference between the discount price it was sold at minus the full face value.
Meanwhile, Treasury Notes are issued for two years or more, even up to ten years depending on how long the investor wants it. Here, the price of T- notes depends on the demand for it, it can be the lesser, greater, or the same value as the face value of the note, unlike the Treasury bills which are sold at a discount.
T-note Investors are paid a fixed amount of money every six months called the coupon payment and receive the face value upon its maturity date.
Treasury bonds can only be got through auction sales which are carried out throughout the year.
This is also how it’s price and profit is made known. It is usually issued for 20years and 30years. Just like T-notes, the investors also earns a fixed interest every six months and get their face value upon maturity.
Lastly, Treasury Inflation-Protected Securities (TIPS) which was introduced in 1997 are inflation-indexed bonds issued with 5-year, 10-year, and 30-year maturity dates. The principal is affected by the most commonly used measure of inflation known as the Consumer Price Index (CPI). The principal is adjusted upward when the CPI rises and when it drops, the principal is adjusted downwards. Although the coupon rate is constant, when multiplied by the inflation-adjusted principal, it generates a different amount of interest. This making it unaffected by inflation.
Government Bond Funds
In case you didn’t know, government bond funds are investments where you get to loan money to the government for an agreed period and earn a good interest in return.
Investments in government bonds are safe and have the full backing of the government. Investors who are just beginning to invest are encouraged to buy governor funds because, aside from the obvious reason of it being safe, there is always a way out if you’re no longer interested in it or you spot a better deal. It is also classified among the best investments. The first way out is to wait till its maturity date or sell your bond to someone else, whichever way you will still get your money.
Municipal Bond Funds
When investing, huge tax payments can be a discouragement, but that is not the case with Municipal bond funds. Here, interests earned are tax-free, be it federal government, state, and local taxes.
These bonds may be bought individually, through an exchange-traded fund (ETF), Or a mutual fund.
Municipal bond funds are highly liquid in the sense that people can buy or sell them or reinvest them on any working day.
Nasdaq 100 Index Funds
This composite index is made up of more than 2,500 companies including both struggling and established ones. What this does is that it helps investors to invest in the biggest tech companies like Apple, Microsoft, and Amazon.
A Nasdaq 100 index fund provides ownership in all the companies in the index, protects your portfolio from the failure of any single company by offering immediate diversification with a low expense ratio.
And just like any other publicly traded index funds, the Nasdaq index fund can easily be converted to cash on any day the market is open.
A good shelter is one of the necessities of life. So many people in the world would love to own a house. But, not everybody will be able to own a home, at least not at the same time. This is where rental housing is highly important.
If you haven’t already been making money out of this, then you have to start doing so. The number of people moving from town to town for their careers, education, leisure or to start up a family is increasing by the day and would pay for a good flat to live in. So, if you own a property you’re not using, instead of paying for maintenance or abandoning it, you can rent it out to people willing to become your tenants and agree on an amount for it.
Certificates Of Deposit
This is more like a savings account, the only difference is that it yields more interest and requires deposits till a specific time. This time is called maturity dates.
Here, banks pay you for keeping your money with them for a specific amount of time.
CDs are of different types and if you’re saving up for something or planning your retirement, you might want to try this, because the longer you keep your money, the more profit you will make.
Note: CDs are not very liquid and to withdraw your money before its maturity date, you will have to pay.
Dividend Stock Funds
Not all stocks come with the promise of dividends, this is why it is very important to seek out stocks like this.
Dividends are portions of a company’s profit earned by shareholders, usually every quarter. What this does is increase your profit in investments, you don’t only earn on your investment through long-term market appreciation, you’ll also earn additional cash within a short period.
The trick with dividend stocks is to make sure that you invest in companies with good financial management and a history of increasing dividends. It would be wise to sometimes avoid companies that skyrocket in profits and dividends within a short period because the speed they increase with might be the same they crash with.
Foreign Exchange Market, Forex for short is also known as the currency market. It is an over the counter market for trading foreign currencies. It has the highest liquidity, meaning that — you can get back your money whenever you want with interest incurred, it is the largest market in the world in terms of its trading volume.
Foreign exchange has been going on for years on the dates of one, but it just came into the limelight as Corporate bodies, individuals, and even banks. These banks work behind the scenes, they act as “dealers” who are involved in large quantities of foreign exchange trading. And this behind-the-scenes market which involves banks, insurance companies, and other financial firms is known as the “interbank market”.
To invest in forex trading, you have to be trained and very good at it or employ the services of a good and reputable trading firm.
The funny thing about forex trading is that whether you decide to invest in it or not, you are indirectly doing it. How? This is because the banks are using your money to trade and keeping the profits for themselves.
In April 2019 alone, forex trading had an average of $6.6 trillion turnovers daily.
Hope this article about the 11 best investments in 2020 was helpful… Please, kindly drop a comment below of your thoughts about the best investments.