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AO World (LSE: AO) is a stock that really charged in Friday business. The electricals retailer finished 10% higher in end-of-week business and was creeping back towards the six-month highs just shy of 100p punched in late December. I fear, however, that investors are getting a little too giddy given the fragile outlook for the UK retail sector, and suggest that a correction could be coming for AO World given the bulky share price gains of late 2019 and early 2020.

If anything my cautiousness has increased further after the Bank of England released data today on consumer borrowing. According to Threadneedle Street, the yearly growth rate in unsecured lending dropped to 5.7% in November from 6.1% in the previous month. Meanwhile net consumer credit of 600m last month was the smallest flow for six years and well down from the average of 1.1bn since July 2018.

Big ticket blues

Taken in tandem with the poor retail figures that we have been seeing over the past year, these numbers from the Bank illustrate just how stark the growing reluctance of consumers to part with their cash is becoming. And naturally, sellers of big ticket electrical items like AO World should be particularly worried, as sales of the items it sells (whether essentials or luxuries) are the first thing to suffer in times of intense political and economic concern like these.

Recent trading updates from other major sellers of expensive items have exacerbated the sense of concern too. Marshall Motor Holdings, for instance, announced in a pre-Christmas release that the market for automobiles has remained challenging, and that trading conditions had actually weakened further in the fourth quarter.

And in an earlier update, furniture retailer ScS Group warned that its own like-for-like orders were down 7.1% during the 17 weeks to November 23, a result that it said reflected ongoing economic and political uncertainties [that] are continuing to impact consumer confidence and spending.

Too much risk!

AO Worlds share price has carried on ballooning following better-than-expected results in mid-November, at which time its financials showed like-for-like electrical sales rising 4.5% in the six months to September. It now trades at a 60% premium to share price levels before the release, which I think is way too high.

Given the prospect that Brexit uncertainty will likely last through the whole of 2020 at the very least, a situation that would see shoppers keeping a tight rein on their spending, I fear that those hoping for a sustained recovery following that solid first fiscal half could very well end up disappointed.

Im certainly not tempted to buy right now, AO Worlds high forward P/E ratio of 69.9 times for the financial year to March 2021 the period in which its expected to snap back into profit giving me extra reason to fear a share price correction should the news flow indeed disappoint.

I fear for those who will be reliant on their state pension when they retire in 2030 years, because I dont think it will exist by then. Given the high rate of human population growth and rising global debt, I just dont see how anyone could be confident about it.

Thats why I took action early on. In my twenties, I made the decision to start investing. But more than that, I made the decision to start investing in growth stocks.

Why you should invest in growth stocks

Growth stocks are all about capital growth. You dont choose them for dividends or income, but because you want your investment to grow in value. However, growth stocks also tend to come with higher risk; growth stocks can have insanely high price-to-earnings (PE) ratio valuations. Growth stock companies can also be at risk from many other factors simply because they are smaller and younger than large, established industry monoliths. Its easier to for them to be knocked off-course.

But, its also easier for them to navigate stormy waters. Whereas a FTSE 100 giant may struggle to adapt to market trends due to its size, a much smaller growth company may be more nimble.

For those who can afford to take on a bit more risk before they retire, it makes sense to consider growth stocks.

Growth at a reasonable price

Growth at a reasonable price (GARP), as it was called by Peter Lynch, is a strategy that looks for attractive growth businesses that arent valued at lofty P/E ratios. Lynch, a former Fidelity fund manager, also usedthe price-to-earnings growth ratio (PEG) for valuation. This looks at the P/E ratio against the percentage growth rate of a company. For example, a company that is growing its earnings at 40% a year but is rated by the market on a P/E ratio of 20 times earnings would be classed as cheap due to a PEG ratio of 0.5.

Self-sustaining business models

One big problem of growth stocks is that they can be cash-guzzling and loss-making. That means that more cash is often required, from new shareholders, which dilutes the entire issued share capital. Existing investors dont like to see their percentage shareholdings in the business dwindle, so the markets reception of these fund raises can be extremely harsh if management doesnt plan ahead.

Thats why I believe its important to look for growth stocks that are have attractive PEG ratios but that also have self-sustaining business models. This reduces the overall risk of investing in growth stocks.A company that doesnt need external sources of funding to keep the lights on is a lot safer than one that does!

Bonus

One final factor that I like to see in agrowth company is management owning plenty of shares. Its much better for directors to be aligned with shareholders (preferably with their own skin in the game) than for them to have no equity or interest in the businesss success.

I understand the appeal of investing inbuy-to-letproperty. I get it its stable and consistent income.

But if you want to make a million, then sticking to buy-to-let investing could be harming your chances. Stock markets have typically generated higher returns than property over time. Someone who is focused only on buy to let is missing out on a proven wealth builder in the stock market. One big criticism from property investors is that the stock market is risky, and that people will always need property. Thats true though house prices can fall too!

But what if you could get exposure to the stock markets returns, without taking on too much risk? If you buy five companies, then thats a very concentrated portfolio. However, diversification is investings one free lunch through owning many shares we protect ourselves from the effects of a bad stock that implodes.

For this reason, I believe stock market index trackers are a great way for many private investors to invest in the stock market.

A FTSE 100 tracker

A FTSE 100 index tracker is an exchange-traded fund (ETF) that buys shares in every FTSE 100 company. That means anyone who buys this ETF owns great companies such as Royal Dutch Shell, Vodafone, and HSBC. Its instant diversification, and FTSE 100 companies are typically stable and have consistent cash-flows and consistent dividends.

When investing, people should be looking at returns in the long term. If they need that cash within a year or two, then putting that cash into an index tracker is a gamble on the market. Who knows what can happen in two years? But the longer our investment horizon becomes, the more likely it is that well make money. As Benjamin Graham (the father of value investing) said, In the short run, the market is a voting machine but in the long run the market is a weighing machine.

An index tracker is relatively simple to set up, and we can even set up direct debit payments every month to automate the process. This means that well be able to take advantage of any weakness in the stock market as well buy more units of the same ETF when the price is low.

Individual stocks

As well as a solid tracker fund, I think it makes sense to pick individual stocks, so long as one is comfortable with those risks. Risk can be mitigated by knowing what youre doing. Picking stocks that have wide moats, with self-sustaining cash inflows, as well as profits and healthy dividends, are proven methods to help avoid losing money.

We only need to pick one winning stock to make a lifetime of investing worthwhile, and companies like Rightmove and Dart Group (owner of Jet2) have delivered large returns for shareholders. Are these companies so hidden out of sight that we couldnt follow the leads ourselves?

Sometimes a stock market winner is hiding right in front of us. But if all of your cash is set aside in buy to let, then you could be missing out on that upside.

Investing is hard. It can be lonely, and it can be demanding, but most of all it can test our patience. The problem is that in todays market there are always so many reasons to sell.One only has to switch on the news to find a reason. Just this week, airstrikes in Iran have people in a pickle worrying about World War Three. This time last year we were worried about stagnant US growth. The year before it was something else.

Peter Lynch once said that bull markets climb a wall of worry, and its easy to see what he meant. Despite the overwhelming evidence of stock markets globally trending higher, many always choose to be bearish.

However, it pays to be optimistic.

Right now, these three sectors are where I think there may be some fantastic buying opportunities.

Oil & gas

With Greta Thunberg and the launch of the Extinction Rebellion, climate change is on everyones lips. But the reality is that the world still revolves around oil. Yes, the change to electric vehicles may be growing but right now petrol engines far outweigh electric, and will do for years to come.Electric vehicles are expensive, and emerging nations will use whatever fuel they can to power their own industrial revolutions.

Quality production companies that are low-cost operators will be able to weather any storms that hit the non-lean operators first.

Technology

Tech has always been hot, and it always will be. The profit potential from technology companies those that get it right, at least is eye-watering. High gross margins that can be realised because of a scalable platform can deliver large returns for shareholders.

Of course, tech is also always risky, as there is never any guarantee that the business will run smoothly. But, thats part and parcel of the investment opportunity. People who want more reward have to be willing to take on more risk in order to achieve that return. Sometimes the market has simply mis-priced a company completely.

By doing our research, putting in the hours, and looking at the quality of the businesses and financial statements, we may just be able to find the next hot stock early.

Copper

Copper is used in everything from electronics and transportation equipment to building construction, machinery, and consumer products. Demand for this metal especially for electric vehicles will grow, which means those companies that are able to supply copper efficiently could be in the money.To determine whether a copper company is economically viable, look at its all-in costs for production compared to its selling price.

Companies that have large amounts of cash sitting on the balance sheet may also be able to take advantage of straggling competitors.Getting exposure to this metal, in the right company and stock, could prove be a very astute investment in 2020 and the coming years.

In the past the retirement age was 65 (and 60 for women), but it is set to rise to 67 over the next decade. As such, an early retirement may feel like an increasingly distant dream for many workers.

However, by investing in the FTSE 100, it is possible to build a large nest egg from which to enjoy a growing passive income in older age. The index appears to offer good value for money at the present time, and could deliver high returns that boost your financial prospects.

With tax-efficient accounts such as a Stocks and Shares ISA being cost-effective and simple to set up, now could be the right time to start planning for your early retirement.

Past performance

The FTSE 100s price level may only be around 5% higher than it was 20 years ago, but its performance since inception in 1984 has been strong. It has delivered a total return of around 9% per annum over the 36-year period. When compounded, this can lead to significant returns that turn even modest sums of capital into a surprisingly large nest egg.

For example, someone aged 40 who invests 200 per month in the FTSE 100 could have a nest egg of over 200,000 by the time they reach 65 years old. From this, an income of over 8,500 could be generated from the FTSE 100 since it has a dividend yield of 4.3% at the present time.

Clearly, investing a larger amount or holding shares over a longer time period could lead to a larger nest egg. Therefore, it may be a good idea to start planning for retirement as soon as possible to allow the FTSE 100s returns to compound.

Investing today

As mentioned, the FTSE 100 seems to offer a number of sound investment opportunities at the present time. Despite a strong performance in 2019, many of the indexs members trade on lower valuations than their historic averages. This may mean that they offer discounts to their intrinsic values especially since the prospects for the UK and global economies are relatively sound. This could equate to higher returns in the coming years than have been recorded in the recent past.

Investing in the FTSE 100 is relatively simple and cost-effective. Accounts such as a Stocks and Shares ISA can help to reduce your tax bill in the long run, and yet the cost of managing them is minimal. This means they are highly accessible to a wide range of investors. And regular investing features allow smaller investors to start building a retirement portfolio without commission charges severely reducing their overall returns.

Therefore, with the State Pension age set to rise in the coming years, now could be the right time to start building a nest egg. The FTSE 100 appears to offer a sound means of doing so, with a number of its members offering impressive long-term growth outlooks.

According to high-end estate agents Savills, over the next five years, rents in the buy-to-let sector will increase by around 15.4% on average across the UK. London will see a better performance, according to the study, with rents growing roughly 18.8%, but this growth is unlikely to start in 2020.

For this year, the property experts are forecasting rental growth in London of just 2%.

These mixed forecasts are just one of the reasons why I am avoiding buy-to-let property in 2020. While there are some green shoots in the market for landlords, on the whole, I think the property market looks much less appealing than stocks and shares.

As well as a lack of rental growth, I am also concerned about the regulations the government has recently introduced that have piled the pressure on landlords.

Whats more, the Conservatives also promised to bring an end to no-fault evictions in their manifesto, as well as introducing longer tenancies. However, so far, these rules have not become law and we will have to wait to see if Boris Johnson and his team make good on these promises before considering the impact the changes might have.

A great alternative

An excellent alternative for buy-to-let property is real estate investment trusts (REITs). These publicly traded vehicles invest in property around the UK and offer investors exposure to properties that would be impossible to buy as an individual, such as hospitals, supermarkets and even theme parks.

REITs offer exposure to property without you having to do any extra hard work. Experienced management teams are responsible for the day-to-day management of the properties, and these investment trusts are usually able to invest in the best quality assets before they hit the public markets.

Some trusts offer dividend yields of 5% or more and can be owned inside a Stocks and Shares ISA, so there is no further tax liability to pay.

Capital growth

The one downside of REITs is that they tend to underperform the rest of the market as capital performance is linked to property values, which dont tend to rise rapidly.

If it is capital growth youre after, growth stocks such as Wizz Air could be much better investments. Wizz is planning to triple the size of its fleet over the next eight years, which could lead to a tripling in earnings per share, and a subsequent threefold increase in the airlines stock price.

Other companies, such as Reckitt Benckiser offer exposure to the fast-growing and defensive consumer goods market. The other advantage these companies have over buy-to-let property is international diversification, which should protect earnings growth against any Brexit-inspired economic disruption over the next 12 months.

So, those are some of the reasons why Im still avoiding buy-to-let property in 2020. I think the stock market could provide much better returns with a lower initial investment and international diversification.