If you have 20,000 to invest in 2020, you have no shortage of investment options. Gold, cryptocurrencies, buy-to-let property and stocks are just some of the assets you could put your money into.
Yet realistically, some assets are likely to deliver stronger long-term returns than others in the years ahead, so its important that you invest your money wisely. With that in mind, heres a look at why Id avoid gold, bitcoin, and buy-to-let as we kick off the new decade, and where Id invest 20k instead.
Gold
While gold can be effective as a hedge against uncertainty, I wouldnt want to invest a large chunk of money in the precious metal. The main reason I say this is that gold doesnt generate any earnings or income. As Warren Buffett says, gold doesnt do anything but sit there and look at you.
Sure, the gold price could keep rising in 2020. But it could just as easily fall if sentiment towards the yellow metal deteriorates. Just ask those who bought gold in 2011 and are still sitting on losses today.
Cryptocurrencies
While many people believe that cryptocurrencies such as Bitcoin are a ticket to riches, personally, Im not convinced. Not only are cryptocurrencies impossible to value and notoriously volatile, but theres now also a great deal of regulatory uncertainty in relation to the asset class. Major regulators such as the Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC) are cracking down hard on crypto-assets. Ultimately, as a long-term investment, cryptocurrencies are unproven so Id leave them alone.
Buy-to-let
In the past, buy-to-let property was an easy way to make money. However, in my view, that ship has sailed. For starters, house price growth has stalled. And with Brexit uncertainty lingering, I think lower house price growth could persist for a while.
Secondly, the government has really cracked down on buy-to-let recently. Stamp duty surcharges have been introduced while mortgage interest tax relief has been phased out. Additionally, theres now a heavy weight of regulation that you have to deal with as a landlord. All things considered, buy-to-let now looks far less attractive than it used to.
How Id invest 20k this year
So, how would I invest 20k as we start the new decade?
Personally, Id put my money into the stock market. More specifically, Id invest in two main types of stocks:
-
High-quality FTSE 100 dividend stocks that have attractive long-term growth prospects, such as Unilever, Diageo, and Prudential, in order to create a passive income that grows every year
-
Internationally-listed growth stocks such as Apple (Warren Buffetts top stock), Microsoft, and Google, as well as smaller UK companies such as Boohoo for capital gains
Of course, Id invest my capital within a Stocks and Shares ISA (which has an annual allowance of 20,000) so that all my gains are entirely tax-free. And Id drip-feed my money into the stock market over time, to reduce the risk of investing at market highs.
Ultimately, I believe this two-pronged, tax-efficient approach, whichhas the potential to deliver a fantastic mix of capital gains and passive income over time, is the best way to achieve financial freedom.
Theres a double agent hiding in the FTSE
We recommend you buy it!
You can now read our new stock presentation.
It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.
They think its offering an incredible opportunity to grow your wealth over the long term at its current price regardless of what happens in the wider market.
Thats why theyre referring to it as the FTSEs double agent.
Because they believe its working both with the market And against it.
To find out why we think you should add it to your portfolio today