As New Year’s resolutions are fresh on your mind, there’s no better time than now to initiate and strengthen wealth-building strategies. To help inspire you, I’ve created a list of best investments for 2020.
This article is about where you can direct your money and time this year so that ten and twenty years from now, you’ll be glad you made the investments.
It’s not about making a quick buck.
If you want to accelerate your wealth trajectory by creating multiple income streams from targeted investments, this article is a good place to start.
Before we get into the list, here are a few things to keep in mind.
Slow and steady wins the race. That’s the philosophy that I follow, even though some folks might be willing to take more risk for greater reward.
Immediate results are elusive, but long-term desired outcomes are probable with this mindset.
Investments come in many forms. Your time directed toward a specific goal is perhaps one of the best investments you can make. Think hard about where you spent your free time last year. Did it contribute to your long-term goals?
Finally, always perform due diligence when embarking on new investments. Just because a blogger writes about it, or someone on TV says it, doesn’t mean it’s right for you.
The 5 Best Investments in 2020 for Long-Term Growth
Based on my 25 years of experience investing, factoring in my successes, and many mistakes and failures, I’ve put together this list of best investments for 2020.
Most of these will look familiar because I haven’t spent the last six years blogging about the worst investments! This list hasn’t changed much since last year either, because a long-term investment strategy must stay on track to achieve results
In addition to the usual suspects, consider making significant time investments in personal growth to feed your curiosities, educate yourself, and strive to craft your best life. Those investments pay the best dividends.
You should buy stocks in 2020.
I said that last year, and I’ll say it again next year. I say it because investing in stocks should be habitual. Regularly invest small amounts in the stock market.
It’s easier now that almost all online brokers eliminated commissions.
I’m not saying if you buy stocks on January 1st, your investment will be worth more on December 31st.
But if you want to create lasting wealth, investing in the largest and best companies in the world has been a successful strategy over the last century.
The stock market was up more than 25% in 2019. That might scare you if your investment horizon is one year.
But I advocate for thinking about investing in 10 to 20-year increments. The money you invest in 2020 will be worth more in 2030 and 2040.
Utilize your employer-sponsored 401(k) or other tax-advantaged accounts to automatically dollar cost average in broad-based index funds if you’re just getting started. If your plan doesn’t have low-cost funds, managed growth stock mutual funds are OK too, but keep an eye on fees.
You can also start to build passive income through dividend growth investing. Please do thorough research on any individual stock you buy. Focus on companies with long dividend-paying track records and moderate debt exposure.
For IRAs and taxable investing, I recommend the commission-free online broker M1 Finance for beginner to intermediate investors. The minimum investment to get started is $100.
Read more: M1 Finance review
Read more: Getting Started with Investing? Here’s What I’d Do
For those looking for help choosing the right stocks, I subscribe to and recommend two investing newsletters. The Sure Dividend Newsletter focuses on dividend growth stocks, and the Motley Fool Stock Advisor newsletter provides stock tips on high-growth stocks.
2. Real Estate
Even though I’m primarily an index fund and dividend stock investor, I believe that real estate is a more lucrative investment over the long-term if used as a rental property.
That’s because you get capital appreciation, rental income, and significant tax advantages from real estate. Also, there are several ways to finance real estate deals: all cash, mortgage financing, private financing, home equity loans, etc., giving you a ton of flexibility.
Money is made by finding good deals. My recently sold investment property didn’t return much in the 12 years I owned it because I overpaid. So there is a due diligence component if you want to be a successful investor.
Young beginners should consider a strategy called house hacking, which is a great way to get started.
Mid-career to older investors can buy and rent a single-family home, multi-family units, or look at turnkey rental opportunities. Now that I sold my lousy rental, I’m starting to look at investment properties again.
If the thought of a multi-thousand dollar down payment or being a landlord is off-putting, consider real estate crowdfunding platforms such as Fundrise (review) where you can own high-quality real estate for as little as $500.
Accredited investors looking for more substantial equity and debt deals and higher returns should look at crowdfunding sites such as:
- RealtyMogul (review)
- EquityMultiple (review)
3. Invest in Starting a Low-Cost Side Business
Starting a side business has been one of the most rewarding endeavors of my life. Not only do I work on something I enjoy, it earns supplemental income to help support our single-income family.
The dollar cost of starting my business was less than $100 in the first year. The real cost was the amount of time I spent on my business, which was a lot.
Though I love blogging as a hobby and business, it isn’t right for some people.
With the maturity of the internet and all the platforms from which you can earn money (think Etsy, eBay, Upwork, Fiverr, Amazon, etc.), and all the free information telling you how to make money online, the opportunities are endless.
Or start a local side business. Don’t go…