Investing doesn’t come with any guarantees for success. That leaves it up to the investor to consider how much they are willing to risk, how much of a gamble they are willing to take, and their openness to looking at some less conventional ideas to get the most return on investment. Interestingly, some of the options available to today’s prospective investors aren’t what you’d expect. Here are some non-stock investment ideas to consider if you are looking for investment opportunities in 2020.
Real Estate Investment
Real estate makes a good investment for several reasons:
It will continue to increase in value over time helping reduce the risk for losses
You can use real estate for diversifying your stock portfolio to reduce risk
You can enjoy some tax benefits
Real estate investment allows you to choose from a few profitable options, including:
Fix and flips: Purchasing fixer-uppers at a lower price, renovating and selling them at a profit.
Buying a home: Investing in the purchase of your own home and living there to build equity.
Land: Purchasing a tract of land and holding onto it until demand rises and you can sell for a profit.
You can also consider purchasing your own house and renting part of your home to help you earn profits and pay down your mortgage. The trick to real estate investment is the tried and true formula to buy low and sell high. As long as you have the capital for the down payment and can make your mortgage payments, you can build your assets with real estate investments.
Real Estate Investment Funds (REITs)
If you are not sure you want to worry about managing rental properties, you can choose to invest in real estate through real estate investment funds (REITs). This option allows you to invest the same way you do with shares but instead of stocks, you are investing in shares of residential and commercial real estate properties.
The way it works is you choose the amount you wish to invest and even the risk you are willing to take. You earn money from the rent generated by the properties, without the hassle of dealing directly with tenants. The good thing about this type of real estate investment is that you don’t have to contend with the whole mortgage process. Instead, you simply decide what amount you wish to invest and use it to buy your shares. Adding to their attraction, REITs dollar value grew 215 percent, in the past decade. Which makes it an impressive ROI.
Pay Off Debt
This might not sound like an investment at all, but if you have debt, this is the smartest way to invest. Right now, you are paying a large amount of money towards interest built up in your debt balances. By focusing on paying off debt, you will decrease the amount of money going towards interest and begin to build your wealth.
This is especially important if you owe large balances on credit cards. If you do the math and consider you owe $10,000 on your credit card with an interest rate of 20%, that is costing you $2,000 each year. Most people are unaware of the impact interest can make on their money over a year period. Because of this, they will continue to pay the minimum payments thinking they are bringing more cash into their homes each month. However, the more effort you put into paying down debt, the more beneficial it is for you.
Your debt will disappear, your savings from interest isn’t taxable and you will eventually have improved cash flow once your balances are paid off completely. With the money saved, you are then free to look into other investment options.
Planning for the future is important, regardless of your age. In fact, the sooner you start saving, the more comfortable you will be when retirement comes around. You might even be able to retire earlier if you plan smart.
One of the easiest ways to save for retirement is to contribute to a Registered Retirement Savings Plan (RRSP). You can set up an RRSP with your bank or other financial institutions and contribute independently or with your partner. As long as your money remains in the plan, your earnings remain tax-exempt. As well, although you will have to pay taxes on the plan when you begin to receive payments, you also have tax benefits to RRSPs.
When you file your tax return, you have the option to contribute to your RRSP in the amount of 18% of your previous year’s income or a specified amount, based on what amount would be less. You can then use your contribution to lower your taxable income. The reason your taxable income is reduced is because your contribution is added to your taxes, but your marginal tax rate remains the same. For example, if you made $55,000, contributed $5,000 to the RRSP and your marginal tax rate is 28%, you would save $1,410 on your income taxes. You can make contributions until you turn 71. If your partner is younger, it would be up until the time they turn 71.
As well, many employers will contribute to your RRSP, or offer pension plans. If this is the case, it is something you should opt into as it helps you increase your savings for retirement.
Start a Side Business
People start side businesses for various reasons. Regardless of whether you’ve always wanted to be your own boss or if you simply need an extra stream of income, starting a business on the side can be a lucrative investment idea. Many opportunities require little to no investment upfront, other than your time invested. If things go well, you can eventually make your business your full-time occupation. If things don’t go as well as you have hoped, you can move on without substantial losses.
One of the most popular side businesses is seeking “gig work” through rideshare programs. This is an excellent option if you don’t have a particular skill or talent you feel can be used to earn money. However, don’t sell your talents short. For example, even being a fast, accurate typist can earn you money on the side.
Many people find success using a hobby they love to start a business, such as woodworking or fashion design. Forbes has some interesting ideas from becoming a tour guide in your hometown to using your social media talents to offer marketing services to local businesses. The more committed you are, the more successful you can become.
While some of these ideas for what to invest in might be a surprise, you will find there is always an opportunity to increase your wealth.