Great Investment Ideas for 2020

Ideas are what shapes the reality we see tomorrow. Hence we can all agree that ideas are the backbone of any progress made in society. History shows that ideas, when not acted on mean nothing. It is therefore, important that a realistic action plan should aid ideas. This same line of action applies in the field of investment.

The complete investor is an individual who understands the economic implications of politics and events. Then plans towards it in the coming year; leaving nothing to chance. Making full gains of opportunities as they present themselves. 2019, was an eventful year for investors, full of a lot of instability. The upcoming year 2020 is gleaming full of uncertainties and rewards.

This write-up lists both active and passive roles of investment to help you plan for 2020. Active roles require that you are constantly aware and involved in the decision-making process. While passive roles make use of leverage so that your input is not compulsory. Passive streams of income are every entrepreneur's desire, but it is more difficult to attain and maintain.

Lending Companies

Lending is a form of financing that is very similar to borrowing. It means giving out a loan to a person, group, or organization with the hope that they'll pay at an agreed date. The borrower pays the lender back the loan with interest. Usually, the higher the risk involved the greater the interest rate. Lending companies/clubs are "peer to peer" platforms to ease lending processes through networking.

Lending companies allow you to diversify your investment portfolio. This diversification protects you from the fails of any single loan deal. Additionally, you can permit loans based on your assessment of the credit-worthiness of the borrower. Experienced entrepreneurs get the best resume writing service to draw up applications for them. This is to increase their credibility in loan applications.

Forex

Foreign exchange is popularly known as forex, is the trading of currencies. It refers to the free-floating value of currencies based on the market forces of demand and supply. Hence socio-economic events like war, politics, economic recession, etc. influence forex.

Forex is currently the largest financial market in the world. It has billions of dollars traded daily. Forex is very convenient because all you essentially need is just internet access. This allows investors to still go about their daily business.

This industry doesn't encourage creativity. A lot of bank organizations, statutory boards, and agencies govern this market. This is to ensure that the masses are not cheated of their funds. The investors bear all the risk in this business, thus investors should use idle funds.

Real Estate

As long as mankind exists, there'll always be demand for housing and landed properties. This is the purpose of real estate, up till now real estate investing is a bit different from real estate development. One is about the financing of such projects, while the other is the development and construction of the project. Real estate investing is capital intensive and requires a high level of financial intelligence. It allows investors to make use of leverage and incur –good- debts as offsets of a required down payment.

Real estate provides a steady flow of passive income when managed well. Management is the key to sustained growth. Poor management of properties, lawsuits, tenant relations, etc., can lead to losses eroding the profits gained. The investor must also be knowledgeable and skilled in debt management if he/she hopes to leverage other people's funds.

In many countries, the government provides tax breaks to the real estate industry as incentives. These tax breaks allow investors to not pay tax on capital gains. Zoning laws encourage creativity in this marketplace. Real estate success rates, depends on your bargaining power. There are other ways to get involved in real estate without becoming a landlord.

Invest in REIT

Real estate investment Trusts (REITs) are trust funds that specialize only in real estate projects. They are ideal for investors with low exposure but have the capital. They work similarly to their counterparts hedge funds in financial markets. Commonly, REITs diversify in multiple large-scale projects to reduce risk. This is also a marketing scheme to attract more investors by increasing their portfolio.

Invest in Real Estate Mutual Funds

Mutual fund companies that deal with real estate are a rising trend. They provide a low risk to investors, but correspondingly a low dividend rate too.

Invest in Real Estate-focused Companies

This is similar to investing in bonds but instead as an angel investor.

Providing Loans

An investor may have the funding but no interest in getting directly involved with the industry. You can act as a financial institution providing credit facilities (loans) to credible realtors and developers. This passive strategy allows you to watch from an external standpoint and gather the desired exposure.

Stocks

The stock market refers to open markets that exist for issuing, buying and selling stocks that trade on a stock exchange or over-the-counter. Stocks are also known as equities. Stocks denote fractional ownership in a company, and a stock market is a place where investors can buy and sell ownership of such investible assets.

The stock exchange is a good way for investors to make both passive and active income. It is a common misconception that Investment strategies aren't dependent on the temperament on the investor. Investors should work with strategies that fit their temperament, timing, and lifestyle to reduce risk. The value investing strategy favors passive oriented investors. On the other hand, growth investing strategies are more suitable for active investors.

Investors love stocks because of the high liquidity rate. This enables any involved party to withdraw at any point from the market. Unlike forex, not all stock markets are internet-based, having no physical locations. Likewise, certain hybrid markets are physical but allow certain functions to be remotely performed. 

Bonds

Entrepreneurs use bonds as another means of financing loans and projects. It is used by individuals, groups, parties, agencies and even governments. A bond is a fixed income instrument that is used to secure a loan from an investor. The bond details show the agreed interest rates, mode of payment, maturity date, and also the terms of a variable or fixed payment.

As an investor, an increase in bond prices is favorable. This shows the inverse relationship between bond prices and interest rates.

Government Bond Funds

This is bonds issued by governments with the promise to pay back interest annuity in the set date of maturity. It is usually issued in the national currency of the county. Investors have trust because it rarely ever fails. When a government defaults in making payments, it is termed as a "sovereign debt crisis". Today, many laws and financial systems are in place to avoid this from occurring.

It is risk-free to the extent that the government can make more money to redeem its bonds. The main challenge faced is that the inflation risk factored may be exceeded. This would mean a loss in the purchasing power of the money redeemed.

Municipal bond funds

These are bonds issued to investors by municipal and township development boards. They are sometimes tax-free to serve as an incentive to investors.

Short-term corporate bond funds

Bonds are units of corporate debt issued by companies and securitize as trade-able assets. Companies find bond as an easier alternative than seeking bank loans. This is because bonds provide more favorable terms and lower interest rates for such companies.

In the world of investments, the place of ideas is undeniable, yielding mindblowing results when actualized. As the saying goes, "Failure to plan, is planning to fail". Investors are encouraged to make it a point of duty to have well-researched plans for the upcoming year.