The Best Way To Start Investing In 2020

One of the best periods to review your existing investment strategy is when the new year has just started. The year 2020 is a new chapter waiting for you to write despite the setbacks of last year.

In terms of investing, there’s a lot you can do even with a little at hand, and many people would agree. You can start your investing journey today if you have one thousand, one hundred, or even only twenty-five dollars.

Not investing in any form is one sure way to drive your goal of being rich away.

You’ll make more money when you invest sooner than later since more interest will accrue.

So, what’s the best way to start investing in 2020?With the vast array of options available, it can be challenging to choose one. Take a look at the top three options below.
 

1. Stock Funds

One excellent option to invest in is a stock fund, especially if you don’t want to spend time and effort into analyzing the performance of individual stocks. There are different types of stock funds, and two that stand out the most are an exchange-traded fund and a mutual fund. 

If you’re still a beginner investor, a mutual fund or an index fund is the best way to invest $1000 (according to 72.72% experts). 

There’s a high chance you’ll get many high-growth stocks if you opt for a fund that’s broadly diversified, like a Nasdaq-100 or an S&P 500. When compared to owning only a few individual stocks, a broadly diversified fund will give you a safer set of companies. 

If you don’t see yourself doing investing full-time but like to be more aggressive, a stock fund is no doubt an excellent choice for you. 

The good thing about a stock fund is that there are many companies within it, and, as an investor, you’ll have the chance to enjoy their weighted average return. That said, when compared to holding only a few stocks, a stock fund will be less volatile.

The returns of a stock fund are also going to be more stable than individual stocks despite not all of the companies under it excelling in a given year.

3. Robo-advisor Portfolio

If your investment portfolio has been a mess for quite some time now, consider trying robo-advisors. It’s also ideal for newbie investors who don’t want to perform much of the hard work behind the scenes and prefer to let professionals take care of things. 

In today’s investing world, too much stock picking and experimentation will do more harm than good. 

If you’re ready to invest, say, $1,000,000, all you have to do is deposit the money into a robo account, and it will automatically get invested based on the goals, risk tolerance, and time horizon you have set. 
 

Here’s how financial blogger Mr. 1500 at InvestmentZen recommends investing a million dollars: put at least 60% of it into Vanguard’s total stock market index fund. Then, perform some rebalancing after every year. Also, when the market drops, don’t forget to take advantage of the practice of tax-loss harvesting. However, this won’t be simple for all investors; it might not be straightforward and may sound like too much work for some. If that’s the case for you, consider a robo-advisor that does all those things, making the process of investing completely hands-off and more comfortable for you.

Depending on how you want your investment to work, you can set your account as either conservative or aggressive, and the robo-advisor will manage it based on your preference. 

Long-term investing is also ideal with robo-advisors as they can build a broadly diversified investment portfolio for you. 

 

3. Real Estate

Long-term investing should lean more towards real estate. 

While it’s true that you need a considerable amount of money to start investing in real estate, it’s worth it, especially if you can hold an asset for a few years where commissions and returns are quite high.

However, if you don’t have the necessary capital yet, you can start with housing stocks instead of immediately buying a property.

Since you can borrow money from the bank as you start investing in real estate, it has become an attractive form of investment and will continue to be one in 2020 — no wonder why it’s the ideal investment for a lot of people around the world. 

The property owners can benefit from numerous tax laws while being their own boss, especially when renting out the property. That said, you still have to do a bit of active management despite real estate being a generally a passive investment.

The rewards are consistently high as long as you are willing to face high risks, too. 

By holding an asset over time, you’ll earn many times the money you’ve invested in the first place, provided you’ve selected an excellent property and managed it well.

Real estate is also the best way to start investing for older investors since they can enjoy better cash flow and greater stability after paying off the property’s mortgage.

 

Conclusion

There are many ways to invest your hard-earned money. All of them carry risks and may also bring excellent returns. However, if you’re a newbie who’s only going to start investing this year, the ways discussed above should put you on the safe side without sacrificing the potential of stable returns.