Investing money can be a real challenge. And with the amount of information available, trying to figure out which one is viable is a lot like looking for a needle in a haystack. It can be hard to get a good grasp on investing but a great place to start is by getting acquainted with the basics. This is important as setting an investment goal and finding out where to put in the money will go a long way towards attaining the said goal.
Before anything else, people must understand that investing is not a get-rich-overnight scheme. Rather, it is a practice that will allow you to consistently develop the resources that you already have. The great thing is you don’t need to have a lot to get started. Compounding interest dictates that even a small amount can be transformed into a fortune over a period of time, provided that the right investment opportunities are picked.
So, how can we know what the best investments to make are this year? It’s an inexact science but looking at trends, some time-honored wisdom and some bankable plans and these are the tips worth following:
1) Stick with Stocks But Try Tweaking Your Portfolio
The previous year was one for the record books in the stock market. As measured by the S&P 500 index, the market spiked up by an astounding 29% for the year. It’s difficult to argue against that sort of success, especially with the current leg of the bull market coming up on its eleventh year. You’ll definitely want to keep a substantial portion of your portfolio in the market, especially in an index fund tied the S&P 500. No bull market goes on forever, but this one is showing no signs of running out of steam.
However, a one-year rise of that magnitude could be an indicator that it’s time to get a bit careful. That doesn’t mean lessening your stock holdings. But rather, you may want to be more cautious by concentrating on sectors outside the S&P 500 alone. Even if the market does slow down, particular sectors continue to hold strong potential for continued growth.
Healthcare appears to be a durable sector, even when the general market is on a downturn. Although the healthcare field in general trailed the S&P 500 in 2019, the SPDR S&P Biotech ETF turned in a one-year return of close to 30%. It may mark a chance to keep on producing double-digit returns even in a less cooperative market.
2) Real Estate Investment Trusts
Real estate has shown that it is one of the best investments of all time, with returns akin to the S&P 500 over the long term. But possessing properties can be as much of an occupation as it is an investment. In addition, purchasing individual properties takes a lot of capital, and can leave you open to tenants not paying rent, and months of missed income between rentals. However, if you really want to invest in real estate, but don’t want to risk your life’s savings, you can try investing through real estate investment trusts (REIT).
A REIT is similar to a mutual fund that has individual properties. They usually specialize in particular sectors, like office buildings, retail space, or warehouse and storage facilities. But perhaps the best pick for 2020 will be apartment REITs. With house prices rising beyond the range of affordability in many of the markets with the best jobs, renting is becoming the housing mode of choice.