The stock market is back to record highs while the economy is in trouble. What are your investment options in 2020? Folks are investing in stocks because they don’t anything else to invest in. Is that really the case and, especially, are stocks really a safe bet right now? Nobody has a crystal ball to predict exactly where the future will take us but we would nevertheless like to offer our thoughts about profitable and safe investment options for 2020 and beyond.
Best Place to Invest Money Right Now
This is what investors would always like to know but to know the perfect answer you need your crystal ball to predict the future. The issues today affecting investments include a stock market where investors are putting their money because interest rates are low and the market has been going up. However, the economy is not yet back on track and further growth in stocks will be tied to the shape of the economic recovery. Many investors are betting on a quick recovery with a “V” shape instead of a prolonged “U-shaped” recovery or an “L” shape that lasts for years.
Short Term, Safe Investments
If you are unsure about how this will turn out, short term investments might be your best bet. Bankrate has some useful advice about the best short term investments in August of 2020. They suggest the following:
Short-term corporate bond funds
Short-term US government bond funds
Money market accounts
Certificates of deposit
Cash management accounts
As you will note, stocks are not on this list.
Investing for the Future (and Accepting Short Term Risk)
Bloomberg offers several options in their article about Where to Invest $10000 Right Now. It is a useful read and looks at where growth will be down the line. Here is where you need to apply the concept of intrinsic stock value and look out a few years. That will take away much of the concern about a second market crash in 2020. Artificial intelligence is mentioned in their article along with investment in the Eurozone and UK. If you are willing to take the risk of a short term correction, an ETF that follows the FAANG stocks and using a dollar cost averaging approach would be a sound approach.
Good ideas about where to invest money to get good returns in the short term can be found on the Bankrate list. And ideas about where to invest to benefit for the long term will be found in the Bloomberg article.
Finding safe investments with high returns is always a problem because there are always tradeoffs.
Investing Money for Beginners
The best advice for beginners who want to invest is to start early, invest regularly, do your homework and avoid “tips.” Pay down your credit cards before you start any serious investing because the odds of your finding a safe investment that outpaces the interest rates on credit cards is pretty remote. Unless you have the expertise and time to study the stock market and individual stocks, it is a good idea to start with an ETF (exchange traded fund) that tracks the S&P 500. These funds have outpaced most investment managers for the last decade. When you do start to pick your own investments whether in stocks, bonds, or real estate, follow the thinking of pros like Warren Buffett who only invests when he fully understands what a company or other investment does to make money and how its business plan will continue to reliably make money into the distant future.
Investment Options 2020 – Slideshare Version