Which are the Best Investment ideas for 2020? Where to invest money for extraordinary returns? These are the most popular questions that popup in the investor’s mind while investing. Let’s try to get answers to these questions.
Well, as per me best investment idea is one that allows investors to accomplish their financial goals. The financial goal could be retirement, child education, marriage, buying a new house etc. For every financial goals, you need to make a plan and select an investment option as per your risk appetite.
Most of the investors are looking for a high return investment option with low risk when it comes to investment. However, there are no low-risk investment options that provide a higher return. Risk and returns are inversely proportional to each other. This means if you are looking for a higher return you need to select a high-risk investment option. Select the best investment option as per your risk appetite and financial goal.
The year 2019 was a year of gold. Gold has generated 20% returns in 2019. Apart from gold, equity has also given above-average returns to investors in 2019. Here is a list of 10 Best Investment Options in 2020 that are likely to give better returns.
Best Investment Ideas 2020 | 5 Best Investment Options
#1 Direct Equity
Direct Equity Investment is first on the list of best investment ideas for investment in 2020. In the year 2019, equity has given an above-average return. But, it is expected that in 2020 equity is likely to give a superior return.
Investment is direct equity is subject to market risk. It is a volatile asset class and there is no guarantee of returns. As an investor, you need to do a lot of research to identify good stock for the investment. The time of investment and price of share matters a lot. You can become wealthy by investing money in direct equity. There are many examples of multibagger stocks that have made investors wealthy over the long run.
You can expect around 8-15% return from the stock market. You need to open a demat account to start investing in direct equity.
Who should invest in Direct Equity?
Knowledge and skill are must for direct equity investment. If you have knowledge, skill and high-risk taking capacity you can plan to invest your money in direct equity (stock market).
#2 Equity Mutual Funds
Equity Mutual Fund is another popular investment option recommended for 2020. Equity mutual funds generate higher returns by investing money in stocks across capitalization. Equity mutual funds invest at least 65% of their assets in equity and equity-related mutual funds.
Equity mutual fund is slightly less risky investment option compared to direct equity. However, there are multiple benefits of investing money in equity mutual funds. You can invest in the mutual fund via SIP route. Mutual funds offer good diversification. You can earn good returns by investing money in mutual funds over the long run.
You can expect around 10-16% return by investing in equity mutual funds. It is recommended to go for direct mutual fund and growth options while investing money in equity mutual funds.
Who should invest in Equity Mutual Fund?
If you want to balance risk and return mutual fund investment is for you. You can expect very good returns from mutual funds over a long run.
#3 ELSS
ELSS – Equity-linked saving is scheme is an evergreen investment option for tax saving. Investments made under ELSS are tax-free under section 80 C. ELSS invests a large percentage of their portfolio in equity. ELSS comes with the lowest lock-in period compared to other investment options. ELSS offers dual benefits of capital appreciation as well as tax saving. You have to be careful in making a selection of ELSS.
You can expect around 10-12% returns by investing in ELSS. The return given by ELSS is highest under the tax-saving category of instruments.
Who should invest in ELSS?
If you want to get capital appreciation as well as tax saving, ELSS is the best option. This investment is not suitable for risk averse investors.
#4 NPS
NPS (National Pension Scheme) is government sponsored pension scheme. NPS investment also offers tax benefits under section 80C and 80CCD. NPS comes with two options active choice and auto choice. Active choice allows investors to select asset class while investing. Whereas auto option invests money automatically in line with the age of subscriber. Drawbacks of NPS are absence of liquidity and taxable returns.
You can expect 8-10% return in NPS. The returns on the investment are market-linked. The fund manager plays a crucial role in managing fund and delivering return under NPS scheme. One can open NPS account online as well as offline.
Who should invest in NPS?
An employee who wish to save additional tax or Investor with moderate risk taking capacity can select NPS as investment option.
#5 PPF
Public Provident Fund (PPF) is next in the list of best investment ideas for 2020. Public provident fund offers fixed returns on the investment which will be declared by the government time to time. It is safest investment option that provides tax benefits to the investor. The returns earned from PPF is also exempted from the tax.
You will get approximate 7.5-8% returns in PPF. It is long term investment option with low or moderate risk. PPF account can be opened online as well as offline.
Who should invest in PPF?
A conservative investor looking for fixed moderate return along with tax saving for the long term can invest in PPF.
Points to consider while selecting Best Investment Option
Make sure to consider the following aspects while investing your money in any of the above investment options.
- Investment Objective – You should be clear about your investment objective before investing.
- Tenure – Another point for consideration is tenure. Investment options are different for the long term and short term.
- Risk-Taking Capacity – Another factor that matters for the selection of investment options is risk-taking capacity. If you are high-risk investor you can consider equity or real estate for the investment.
- Tax – Tax is another important factor in the selection of Investment. Tax saving options are different compared to normal investment options.
- Liquidity – Your requirement of cash can affect the selection of investment options. Some investment options do not provide liquidity. Make sure to select the right investment option as per your need.
Dani
Good summary table.
Note that 60% of NPS corpus is tax exempt