5 Investments to Consider in 2020

Investments are a strategic means of growing your source of unearned income. With the outlook on Social Security and other sources of retirement income looking less optimistic, it is important for individuals to consider other options for building their wealth and preparing for retirement.

In addition to your earned income that you bring home from your job, consider these investments to grow your income in 2020 and the years to come—it will be essential to set yourself up for the best financial position.

1. Real Estate

Many Americans consider buying a home or investing in real estate, every year, but the question they are asking themselves is, “is now the right time to buy?”. While that answer depends on several factors including individual financial situations, the state of home sales in the U.S., and long-term goals, purchasing real estate is an investment option that can pay off for many who choose to buy in an up-and-coming market. 

In addition to lack of information, many potential investors are hesitant to purchase property because they do not have the current income to do so. Fortunately, there are many options available that make doing so easier, including low mortgage rates and hard money loans in Houston, Sacramento, Portland and other “boomtowns” that people are gravitating toward. 

1. Employer-Sponsored Retirement Plans 

If your employer offers a retirement plan like a 401(k) or 403(b), you should begin taking advantage of this option as soon as possible. Fortunately, it is fairly simple to contribute a portion of your income to these accounts because you can have it automatically taken out of your paycheck. 

A 401(k) will allow your money to grow tax-free, meaning you will not pay taxes on this portion of your income until you withdraw from this account during retirement. If you are going to contribute to an employer-sponsored retirement account, it is advantageous to increase your contribution as your salary increases.

1. IRA Account 

Take control of your retirement savings with an Individual Retirement Account (IRA). Investing in either a traditional or Roth IRA allows you to invest money pre-tax and withdraw it during retirement at a low tax rate. Those who invest in an IRA may also be eligible for nonrefundable tax credits. 

IRA accounts are fairly easy to set up but have guidelines that must be followed like eligibility requirements and contribution limitations.

1. Certificates of Deposit (CDs)

Certificates of deposit (CDs) are promissory notes issued by your bank or credit union and are insured by the Federal Deposit Insurance Corporation (FDIC). When you purchase a CD it has a maturity date (usually between two and 10 years) to which point it will grow at a fixed interest rate. Once the CD has reached the maturity date, you can withdraw the funds. 

CDs are considered to be a lower risk investment and are only negatively impacted if you withdraw the funds early, at which point you will lose out on some of the interest that has accrued. 

1. Gold

You are likely thinking that investing in gold is an outdated and unrealistic practice, but even some big-time investors are now investing in gold. There are several ways you can invest in gold in 2020: 

• Buy gold coins
• Buy gold bullion 
• Invest in gold securities 
• Purchase stock in gold mining companies
• Purchase stock in gold futures contracts 

If you are going to invest in gold, don’t make the decision lightly. You should ensure that you are making all purchases through a legitimate dealer. 

These 5 investments are a good starting point to begin building a passive income to contribute to your savings or further your investment opportunities including:

• Bonds
• Cryptocurrencies 
• Money market funds
• Mutual funds
• RBI taxable bonds
• Index funds
• Options
• Commodities 

While investments are always associated with some risk, taking a strategic approach can help you make the most of the funds you have available to contribute. If you are unfamiliar with investing, you should consider:
 

• Doing comprehensive research and educating yourself
• Start small with a set amount of money
• Potentially setting yourself up with a broker to manage your investments
• Diversify your portfolio as you have more money to invest 

Starting to invest early on is a smart way to take advantage of the opportunities available to set yourself up for financial success in the future.