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Im pretty optimistic about the FTSE 100s prospects for 2020, but then Ive always been bullish about shares based on my long-term view. But that doesnt always work well in the shorter term, so what things might prove my optimism wrong?

Brexit

I have to start with Brexit. Alhough Boris Johnsons withdrawal bill has passed parliament and were finally due to leave on 31 January, were still depending on less than a year of negotiations over what kind of trade deal well get with the EU. And now that the PM has rushed into law a prohibition on that process going beyond 2020, fears of reverting to World Trade Organization (WTO) rules are back.

Economists think a WTO situation would seriously damage the economy, and if that happens, its almost certain to hurt UK-centric businesses. I can see share prices turning sharply downwards again, with the banking sector being hard hit. Id also expect a resulting weakening in house prices damaging shares in housebuilders and closely related companies.

A possible upside is that global shares on the FTSE 100 could see their share prices gain if the pound crashes (which I expect it would), as theyre essentially valued in US dollars.

World trade

Resorting to global stocks with worldwide reach might not be much of a safety measure if world trade disputes continue, however. The source of the international woes is Donald Trumps escalating trade tariff wars with China, where he doesnt appear to understand how tariffs work. He seems to think that China would pay for the import duties and not American consumers, and didnt appear to foresee retaliatory actions that are hurting American exporters.

The whole thing is really just setting world free trade back into the dark ages of isolationism and protectionism, and a number of economic commentators are suggesting were on the cusp of a downwards turning point for the US economy. Manufacturing output in the US is weakening, and job growth appears to be slowing and a tough economic spell in the US would affect the whole world and its stock markets, including the FTSE 100.

Earnings downturn

One bright point of 2019 has been the high level of FTSE 100 dividends, with a quarter of the stocks in the index recently offering yields of better than 6%. Thats great for income seekers, and there are plenty of dividend stocks I find very attractive. But everything depends on the reliability of those dividends and the strength of the earnings that lie behind them.

And a number of observers are asking whether were heading for a downturn in the earnings cycle and resulting downwards pressure on dividends. If we should see dividends being pared back as 2020 progresses, that could harm sentiment towards stocks in general and pull the Footsie down.

Strategy

What would I do to protect my stock portfolio from these possibilities? Well, nothing, because for one thing I remain a long-term optimist.

Im just going to carry on with my usual strategy of investing in good companies paying reliable dividends, as theyll outlive politicians. And who knows I still think well get an EU trade deal, and theres a US presidential election in 2020.

The outlook for the world economy continues to be highly uncertain. Risks such as a global trade war and geopolitical challenges in the US, Europe and China could cause downgrades to GDP growth in 2020. Furthermore, a bear market could be on the horizon after a decade-long bull market.

However, such a situation could present a buying opportunity for income-seeking investors. It may enable them to buy high-quality stocks while they offer high dividend yields. In many cases they offer long-term growth potential, with history showing that the stock market has always recovered from uncertain periods to produce new record highs.

Of course, diversifying among a range of stocks is a shrewd move. It can help to reduce risk and deliver a sustainable passive income in the long run.

Investing opportunities

As mentioned, the prospects for the world economy are uncertain at the present time. This is not a major surprise, since global growth has been upbeat for many years. Since there has never been a boom period that has lasted in perpetuity, it seems likely that economic challenges could be ahead.

While this may cause paper losses for investors in the short run, it also provides an opportunity to capitalise on the cyclicality of the stock market. In other words, investors appear to have factored in some of the risks facing the world economy. This means that a large range of high-quality stocks now trade on low ratings and high dividend yields. They may, therefore, be well-placed to deliver capital growth and impressive income returns in the coming years.

Growth potential

Of course, a difficult period for the world economy is highly unlikely to last in perpetuity. It has never done so in the past, while the growth potential of major economies such as India and China seem to be high. They are forecast to enjoy a high rate of growth over the next few decades, in fact, and could provide fertile operating environments for a wide range of businesses.

Therefore, investing in stocks may not prove to be a highly profitable move in the short run due to the risks faced by the world economy. But it is likely to be a worthwhile decision in the long run, with a number of high-quality companies that have sound fundamentals likely to produce profit and dividend growth in the coming years.

Diversification

Clearly, buying a wide range of companies that operate in multiple sectors and geographies is a sound move. It helps to reduce risk and may mean that your passive income is more sustainable and less dependent on the financial performance of a small number of companies.

With it being relatively straightforward to diversify through products such as a tracker fund, as well as through buying companies at minimal cost via online sharedealing, now could be the right time to build a portfolio of income shares. It could lead to a high and growing passive income in 2020 and beyond.

A new year always brings bright new opportunities, and 2020 will be no different. At the very least, its an opportunity to look at how well any existing investments have performed, and decide where to put your money next.

Stock markets win!

The past 12 months have been good for stock markets. In fact, the entire decade has been hugely rewarding, as we avoided a recession for its entirety, and thats highly unusual. Central bankers simply couldnt let it happen after the havoc wreaked by the financial crisis, and used low interest rates and monetary easing to keep markets buoyant.

Its been a great time to be an investor andI expect that to continue in 2020, although with more volatility on the way.

Many people dont trust this bull run, the longest in history, and I understand that. However, anybody who shunned it on high-minded grounds will be notably poorer as a result. The stock market remains the best way to build your long-term wealth, and I would choose it over rival asset classes such as a Cash ISA, buy-to-let, Bitcoin and gold. So where to invest now?

Take your opportunities

The answer partly depends on you. Many people find themselves with a ragbag of different stocks and funds, often weighted to just one or two companies, sectors or countries. For example, the US market has been one of the worlds top performers so theres a fair chance many of us will have too much exposure to that. You need to strike a balance, between the US, UK, Europe and emerging markets, with some cash and bonds to balance your risk.

Shares should formed the bulk of your long-term savings, because with an average historical long-term return of around 7% a year, they outpace almost every rival in the longer run. They may be volatile in the short term, but if investing for retirement over 20 or 30 years, they should really beat allcomers.

Make money and pay no tax

If you havent invested before, perhaps the first place to start is your annual tax-free Stocks and Shares ISA allowance. You can set one up quickly and cheaply with an online wealth platform, and all your investment returns will be free of income tax and capital growth. This can make a massive difference to your overall return.

This financial year you can invest anything up to a maximum 20,000. You could keep things simple by sticking your money in a low-cost exchange traded fund tracking the FTSE 100, such as the iShares Core FTSE 100 ETF, possibly balanced with a global fund such as the Vanguard FTSE All-World ETF. In time, you should spread that with two other indices, such as the FTSE 250, S&P 500, and European and emerging markets.

You can then start looking at for individual share opportunities. There are plenty of attractive opportunities out there personally, Id consider popping thesefive stocks into a starter portfolio of FTSE 100 companies.

The important thing then is to stick at it. Keep investing every month, ignore short-term stock market volatility (except as a buying opportunity), and let the dividends and growth roll up throughout 2020 and beyond.Thats my tip for a happy New Year!

A new year, a new resolve. Top of my list for new year resolutions in 2020 is this:

• Make a million

A laudable ambition, Im sure youll agree. But what is the best way to proceed?

The big money-maker in your life

Im not expecting to accumulate a million from a standing start in just the one 12-month period, but I am determined to make a jolly good start. And you can apply the philosophy whatever your existing wealth.

Think of the new year as an opportunity to start accumulating a new million, and for the purpose of this thought exercise, disregard the existing millions you might have!

Lets not forget that earned income is perhaps the most generous vehicle you can use to start accumulating a pot of savings of a million and more. Theres a decent chance that if you add up the amount of money you earn over the course of your working life, it will total more than a million anyway perhaps several million.

So, step one in my plan to accumulate a million in 2020 and beyond is to work hard in my career. I reckon it pays to attack your career with gusto.

An American writer, poet, and attorney from Indiana wrote a well-known prose poem in 1927, which he titled Desiderata. Thats a Latin word meaning, roughly, things desired. A line in it reads:

Keep interested in your own career, however humble; it is a real possession in the changing fortunes of time.

And I reckon thats good advice. You can do several things with your career in 2020 and beyond. Such as splitting off a generous portion of your earnings every month for saving and investing. And throwing yourself heart-and-soul into your work because of the well-used maxim the more you put into something, the more youll get out of it.

By proceeding like that, I reckon you could end up attracting opportunities to increase your income through your career, maybe because of promotion to a better-paid position. Or via bonuses and other mechanisms. And the more you earn, the more money youll be able to divert towards your resolve to accumulate a million.

The money multiplier

However, earnings from working are probably not enough to accumulate great wealth because youll always be capped by the number of hours you can toil each day. And thats where investing comes in. Think of the process of investing as a way to multiply the money youve set aside from your earnings.

The key to becoming rich is to make your money itself work hard for you. And investing in shares and share-backed funds is one way you can harness the awesome power of compounded returns.

Every time you make money from an investment, whether by selling a share thats risen or by collecting dividends, plough it back into more investments and youll be on the road to compounding your way to a million.

Remember that for any given rate of return, such as 10%, for example, the absolute annualised return in pound notes youll receive accelerates over time. Run the numbers you may be amazed at the potential!

The State Pension age is set to rise to 67 within the next decade. However, further increases seem likely at a time when public finances are under pressure and life expectancy is rising. As such, it would be unsurprising for many people currently of working age to have to wait until they are aged 70 or more to receive the State Pension.

Therefore, it may be worth accumulating capital each month and investing it in a range of shares. By focusing on fundamentally sound businesses with strong growth prospects while they trade at low valuations, it may be possible to retire early.

Investing in shares

While many people save money each month, far fewer invest their hard-earned cash in the stock market. This could put them at a disadvantage when it comes to retiring early, since the returns on cash have historically been far lower than those of shares.

For example, at the present time it is difficult to obtain an interest rate on your savings account that is in excess of 1.5%. By contrast, investing in the FTSE 100 offers a dividend yield of 4%, plus capital growth that has averaged 6% per annum since the indexs inception.

Therefore, it may be a worthwhile move for anyone with a long-term time horizon to invest in shares rather than hold cash. Although there may be a higher chance of loss, the track record of the FTSE 100 shows that it has always recovered from short-term challenges to post successful recoveries.

Growth prospects

Of course, your risk can be lowered and your return potential improved by investing in fundamentally-sound businesses. They may have relatively low debt levels, strong cash flow and offer solid strategies that can generate high levels of growth.

At the present time, the growth potential of emerging economies such as India and China is high. As such, it may be a good idea to focus your money on companies that are positioned to capitalise on it. Likewise, buying stocks that are exposed to the UK could be a sound move due to them including margins of safety within their valuations.

Value investing

When it comes to buying shares, history shows that the best time to do it can be during periods of uncertainty for the wider economy. This may present lower share prices that ultimately lead to higher return potential.

For example, at the present time, there are ongoing risks surrounding Brexit and the global trade war. They could cause many high-quality stocks to trade on low valuations, which may improve their return potential.

Although low valuations can be in place for good reason, for example due to higher risks, long-term investors may benefit from focusing on them. They could boost your returns and help you to build a larger nest egg that enables you to retire early.

With the controversial 4bn sale of historic British manufacturer Cobham, its clear that UK defence shares will never go out of fashion. And in his September 2019 spending review, Chancellor Sajid Javid further committed to funding the Ministry of Defence (MoD) to the tune of 2.2bn over the next two years, an increase of 2.6%.

FTSE-listed firms in this sector continue to flourish, in prime position to win long-term, stable, and lucrative, contracts from the MoD and armed forces around the world.

BAE

BAE (LSE:BA.) engineers build the aft fuselage for the next-gen F-35 fighter jet, and alongside working on the UKs Dreadnought nuclear submarines, also repair US Navy ships. BAE won a $171m maintenance contract for the latter in September 2019. Its electronic systems division won a $2.7bn contract the same month to build laser-guided APKWS rockets with sales planned to Lebanon, the Netherlands, Australia and Tunisia.

BAE shares come with a healthy 3.8% dividend and are priced relatively cheaply for a company this size, with a trailing P/E ratio of just 13. This is one for long-term income investors, with dividends per share rising steadily since 2014, always with cover of 1.8 times earnings or more.

A November 2019 trading update showed earnings per share growing in the mid-single digit percent range, with BAE targeting 3bn of free cash flow between now and 2021. Despite the low-interest-rate environment putting pressure on pensions, I think an investment in BAE is a solid long-term play.

Meggitt

The return of Meggitt (LSE:MGGT) to the FTSE 100 in 2019 came after a four-year hiatus. Those interim years were particularly tough for the components manufacturer and while revenues were rising, profits were going nowhere fast.

Meggitt has benefitted from the astronomical increase in US military spending under President Trump. CEO Tony Woods decision to ramp up the Bournemouth-based firms American operations has been reflected in the share price.

November 2019 brought the good news of a six-year $130m contract win with the US Defence Logistics Agency to supply fuel tanks to the F/A-18 Super Hornet, the V-22 Osprey and the Super Stallion helicopter. Margins have been hit by Boeings catastrophic handling of the 737Max, for which Meggitt makes the engine fire detector system, but the manufacturer still upgraded 2019s revenue guidance given a particularly strong performance across the year.

TP Group

51m market cap firm TP Group (LSE:TPG) is much smaller than any of the other defence specialists on this list. Changing its name from Corac in 2015 reflected a switch from research to engineering, and the company now focuses on its space, intelligence and maritime divisions.

In September 2019, it won a 1m MoD contract to upgrade Royal Navy submarines with 750 oxygen generators, following on from a February contract win to furnish the fleet with life-saving lithium hydroxide curtains.

TP Groups balance sheet is looking the healthiest it has in years. Cash at bank hit 22m in 2019, with earnings per share ticking over into the black for the first time in five years as revenues rose accordingly. Adjusted earnings were up 85% between 2017 and 2018, with order books hitting 48.3m. If this momentum continues, Id expect the share price to rocket forward in the next three to five years.