Where to invest in 2020?

The new decade is upon us, and if you’re looking to change your financial outlook and secure future prosperity, there’s no time like right now to start investing. There are many asset classes to follow when choosing where to invest in 2020.

The key to building wealth and achieving financial security is to invest money wisely, but with so many options available, many people find themselves overwhelmed and end up opting for what they perceive as safe, traditional methods like retirement funds and savings accounts.

While there’s nothing inherently wrong with this approach, it isn’t one that will get you spectacular returns, in fact, you may often lose out due to inflation and low-interest rates.

Risk and reward – finding the perfect balance

Before you start investing, it is important to understand your own appetite for risk. Ask yourself whether you can afford to lose your investment before deciding on the strategy that works for you.

In general, the higher the risk, the higher the potential reward. Investment experts usually say that the ideal strategy is one that balances risk and reward according to the individual’s tolerance. The truth of the matter is, by looking beyond traditional options and avoiding hugely risky gambles like cryptocurrency, you can get both great returns and peace of mind that your investment is safe and secure.

When looking for this ideal balance, the rise of alternative investments presents the perfect opportunity, especially to those who do not have large sums to invest initially and would like to build a portfolio over an extended period of time.

The global outlook for 2020

Economists have identified several potential threats to the global economy in 2020, ranging from Brexit, the US/China trade war, escalating climate disasters, and the looming threat of a global recession.

This last point is especially pertinent when choosing where to invest in 2020. The International Monetary Fund (IMF)’s global growth forecast in 2019 was just 3% – the lowest since the last financial crisis. Growth in 2020 is predicted to increase to 3.4%, but the majority of economists expect a global recession to hit before the end of 2021.

Not everyone is so gloomy in their outlook, however, with Goldman Sachs stating: “We expect the global growth slowdown that began in early 2018 to end soon, in response to easier financial conditions and an end to the trade escalation. Although annual-average GDP growth is likely to rise only modestly from 3.1% in 2019 to 3.4% in 2020, this conceals a more pronounced sequential pattern of slowing growth this year and—in our forecast—gradually rising growth next year.”

Predictions for the stock market

While 2019 was a great year for the stock markets, with investments in the S&P 500 returning an incredible 24% since January, analysts are predicting much lower growth in 2020. Wall Street’s equity strategists have predicted an S&P 500 target of 3,272 which means just over a 5% gain.

Ron McCoy, president and CEO of Freedom Capital Advisors, quoted in The Street, says: “Making a prediction with all of the noise out there is not easy even for professionals, but I am confident we likely won’t see another 20% year in 2020, My advice to investors is to know what you own and be careful if you are chasing yields. Thanks to the Fed’s cutting, retired investors are finding it difficult to find a decent return on their savings with relatively low risk and some are unaware of the risk they are taking when they see an investment yielding 9%.”

The stock market should still be a decent option to invest in 2020 for those who know what they’re doing, with technology and innovation leading the charge. If you happen to find the next big tech start-up and can get in early, you could see fantastic returns. But of course, that is easier said than done.

The changing face of property investment

A change in the global property market, driven by proptech and fintech companies is already underway and is expected to accelerate in 2020. Real estate has traditionally lagged behind other industries when it comes to the adoption of technology and usage of big data, but the industry is catching up very quickly.

Investment in proptech is at an all-time high, totalling nearly $20bn in 2018, a 38 per cent increase on 2017, according to research company Venture Scanner. A perfect example of this trend is the fact that, in 2018, SoftBank Vision Fund invested $865m in construction tech start-up Katerra, as well as online marketplace Compass and Opendoor, a start-up that flips homes.

People are looking for new ways to invest in and purchase property, and they are also looking for borderless solutions. Technology will allow you to invest in property across the globe, regardless of your actual location, making property a great asset to choose to invest in 2020.

Crowdinvesting – the perfect alternative

By investing in an asset class with a track record of success but that is less tied to the vagaries of the economy than stocks, bonds and other traditional favourites, you can reduce the overall risk of your portfolio and maximize your returns.

The crowdinvesting model is becoming an increasingly popular way for people to invest in large projects, especially in the real estate field, and earn returns that outperform almost all traditional investments. This is why you should seriously consider this model when deciding where to invest in 2020.

Real estate crowdfunding allows multiple investors to pool their money together to invest in properties and projects. The barrier to entry is much lower than it would be if one were to invest in real estate directly, but it carries the same levels of security.

Investors generally visit an online marketplace and browse opportunities that vary by investment type, geography, and target returns. Once they have selected an investment that aligns with their goals, their funds are pooled with other investors, and the investment is closed.

There are several key benefits to this model.

Lower barrier to entry: If you’re earning a monthly salary, investing in the construction of an office block or apartment complex may seem like an impossible dream, but crowdinvesting makes this dream reality. A platform like EstateGuru has a minimum investment fee of just €50, and you’ll be surprised how much you could earn by investing just that every month.

Easy diversification: The first rule of successful investing is to diversify your portfolio, As property is generally very expensive, this presents a problem to investors without access to major funds. The average Joe simply can’t invest directly into multiple real estate projects. The crowdfunding model allows you to invest in many projects, in multiple locations and into loans used for a variety of different stages in the development process.

More control: The ability to pick and choose your investments on a granular level not only brings a feeling of achievement and satisfaction but allows you to make ethical and moral choices while investing. You can easily research the borrower to determine whether their business aligns with your ideals. You can also invest in specific countries and regions, so if it is important to you that you support your local economy and small businesses, you can do exactly that.

Higher returns: Borrowers are generally willing to pay higher interest rates for crowdfunded loans as they may not be in a position to borrow money from a traditional institution like a bank. The fact that a platform like EstateGuru leverages technology and has a large pool of international investors also means that loans can be funded in a fraction of the time it would take an old school bank to do so. This greater speed and flexibility means borrowers are happy to pay a premium.

Shorter terms: While any good investment strategy will contain some long-term goals, the short-term returns offered by crowdinvesting are a great way to start earning money sooner rather than later. With anything from 12-18 months as a full term and interest between 8% and 12%, it represents a great way to start feeling the benefits of investing fast. Consider crowdinvesting when choosing where to invest in 2020.

Further reading:

How to start investing: A practical guide

How to invest in real estate with no money

How to use real estate crowdfunding as a source of passive income

EstateGuru’s investments start from as little as €50 and there are no fees for investors. Sign up today and begin securing your future – estateguru.co

All investments, including real estate, are speculative in nature and involve substantial risk of loss. We encourage our investors to invest carefully. We also encourage investors to get personal advice from a professional investment advisor and to make independent investigations before acting on information that we publish.