Best Ways to Invest Your Money in 2020
Investments could be seen as an opportunity to save for the rainy days. They help you to gain extra income, which in turn helps you achieve financial goals and targets. Investing simply means to put away certain amounts of money that would generate interests over time. Making investments, instead of blowing up your finances would help you create wealth, stay ahead of inflation, lower your tax burdens, and even prepare for retirement. This article will guide you through some of the best ways to invest your money this year 2020.
1. Invest in Real Estate
Owning properties can be as much of an occupation as it is an investment. Getting involved with real estate does not have any special requirements such as a degree or a certificate. However, some states would require you to have a broker’s license or property manager’s license in order to operate your real estate agency. If you want to invest in real estate, but don’t want to put up your life savings or get your hands dirty, one of the best ways is to invest through Real Estate Investment Trusts.
Investing with Real Estate Investment Trust (REIT), a company which owns, operates, finances and manages real estate is a certain way of being financially secure. REITs help real estate owners to avoid the hassle of actually managing it. They generate income for investors by publicly trading stocks. These are not like physical real estate investments, however.
REITs make investments in a good number of real estate properties such as apartment buildings, hotels, cell towers etc. Commercial real estate was formerly available to wealthy people only, but an amendment in 1960 made it accessible to other classes of individuals in the society.
The REITs lease out spaces and properties, then the rents collected on these are distributed as dividends to investors. REITs receive income and/or profits from the interests they make on their investments.
2. Make Use of High-Yield Savings Account
The class or level you belong in the society does not matter when it comes to having a backup fund. Just like your savings account helps you to earn extra cash, creating a high-yield savings account does the same. However, higher interest rates are promised from high-yield savings accounts than ordinary savings accounts. You can have these accounts paying as much as 2 percent and above. The higher interest helps you achieve your financial targets quicker.
High-yield savings accounts can be operated online giving you easy access to your account as long as you are connected to the Internet. It is a reliable choice for you if you are searching for a secure, short-term investment. This investment has the backing of the Federal Deposit Insurance Corporation, which means that it is safe.
Investing using high-yield savings allows your compound interest to develop during the period of investments and using a compound interest formula would help in the calculation of your interest. That way, you would be able to have an idea of how much return you would be acquiring.
The plus sides to using a high-yield savings account is that the interest rates are about 20 to 25 times higher than what a usual savings account would generate for you. You can also make use of your usual bank to operate your high-yield account, but the highest returns you can receive are from online banks. Electronic transfers also work, from your high-yield account to your checking account for ease of access.
When considering opening a High-yield account take note of the interest rates that the financial institution offers you, the initial deposit you are required to pay, the monthly fees charged by the bank, the possibility of linking your account with other accounts and the ease of access to your money.
3. Invest in Corporate Bond Funds
These bonds are issued to investors by corporations that are looking to raise money. Instead of loaning money to the Government, Corporate Bond Funds work by loaning money to companies. In addition to this, Corporate Bonds provide greater interests than Government Bonds.
As a small-time investor or entrepreneur, you can gain experience by purchasing short-term corporate bond funds; which have a maturity of 1 to 5 years. Or you could invest in a longer maturity date of up to 30 years. Majority of those involved in a corporate bond do not acquire these bonds directly. Instead, they go through a third-party called the corporate trustee.
The corporate trustee or third-party helps to resolve a number of matters. They explain the terms of agreements to investors and they ensure the companies are keeping to their end of the bargain. In other words, they protect the interests and rights of the bondholders.
When you enter into an agreement with them, the company would pay you a percentage of interest on the money lent to them. This is the return on your investment. Their percentages are higher than an ordinary savings account. An instance of a risk that you might encounter is if a company faces bankruptcy, the bondholders and/or investors may not get their returns in full.
4. Invest in Small Businesses
Do you already have a steady inflow of income and are looking for some extra cash? Then, why not invest in new and small businesses? In entrepreneurship, discovering which businesses to invest in could be very tasking. However, they are very rewarding.
Small businesses are usually considered the backbones of the economy. Due to this fact, small businesses need all the support they can get from everyone. When you, as an investor, invest in these businesses, you not only create, build and cultivate your assets; you also help the owners of the businesses to achieve financial freedom.
There are two types of startup investments you can make in a small business. The first is the equity investment, while the second is the debt investment. Equity investment involves exchanging money for ownership and/or profits. Debt investment, on the other hand, is primarily lending money to these businesses.
Small businesses are found in every industry/sector of the economy. Some of the most profitable businesses that you can invest in include copywriting, cleaning services, food truck operation, event planning, etc.
5. Invest in Cryptocurrencies
Cryptocurrency has become one of the latest raves, especially since the first recognized blockchain cryptocurrency Bitcoin, was launched in 2009. Other cryptocurrencies that have come into circulation since then are Ethereum, Litecoin, Peercoin and others.
These digital currencies make lucrative investments seeing as a lot of people make a fortune from it. Despite the advantages of investing in cryptocurrencies, some individuals use them for illegal businesses and transactions, such as money laundering, which would, in turn, affect others. So, before you make an investment in cryptocurrency, ensure you acquire adequate knowledge on them.
The most common form of investing is buying the currency with the intent of it appreciating over time. When investing, do not put in more than you are willing to risk. After buying Bitcoin, ensure that you move them into your Bitcoin wallet; never leave them on exchange. Also, make sure that you buy your currency from reputable Bitcoin exchanges.
Bitcoin is a deflationary currency, that is, it is immune to deflation. For an investment plan, it attracts relatively low transaction fees. It is also very easy to use in any situation you might find yourself. In addition to these advantages, there is no involvement of third-parties.
6. Invest in Tech Stocks
Investing in the technological sector is a sure-fire way to protect your funds and even gain more income in 2020. There are several areas of technology you can decide to invest in. Among these are Artificial Intelligence, Streaming Media, Smartphones, and device companies.
Artificial Intelligence (AI) is simply your computer performing tasks that the human brain would normally perform. Computers are made to work on their own without first being encoded with commands. Streaming Media companies such as Netflix are also part of the technological sector, and due to their high demand, it is advisable to invest in them.
Smartphones (Apple, Samsung etc) and Computer companies (Intel, HP, etc.) create the devices we make use of today, including the software required to run them making them highly sought after and worthy of your investment. Of all the sectors, technology presents the highest returns. You can take the risk and invest in technology this year.
There are varieties of ways you can make investments in the year 2020, and these are only a few of the bunch. Each of these investment ideas come with their own risks and disadvantages. But, if you decide to just focus on the cons, you would find yourself forgetting the benefits of investing in the first place. Many times, all you have to do is take that leap. After all, the greater the risks, the higher the rewards.