The idea of making money while you sleep doesn’t have to be a dream. With the right investment strategy, it can be your reality with your hard-earned money constantly generating greater wealth for you with moderate to high returns.
The question most investors have is, where should I invest? Which investments are going to have the best returns for me now and in the future?
We’re going to weigh in on this common question with our favourite investments available here in Europe, but first it’s important to look at where the markets may be headed so you can make the best decision for your money regardless.
Europe and the Recession
Talks about Europe falling into a recession have gone from a whisper to a booming roar. Many of today’s leading economists believe that Germany’s shrinking economy coupled with the looming Brexit will throw all of Europe into financial hardship. The United States is also believed to be on the cusp of falling into a recession within the next few years.
What does this mean for investors? Now is the time to be more risk-averse. Consider putting some of your investment capital into what are considered to be more safe investment options like:
- Savings accounts
- Savings bonds
- Dividend-paying stocks
- Money market funds
While these might be more safe investments, bear in mind that the returns on these investments will be substantially lower than several other investment opportunities.
Interested in greater risk for a greater reward? Read on to explore some of the best ways you can make your money work for you and receive the best returns in 2020 and beyond.
Exchange Traded Funds (ETFs)
European ETFs are simple and involve low investment costs compared to a mutual fund, making them a great option for beginner and experienced investors alike. Investors can invest in:
- Stocks
- Bonds
- Commodities
- Indexes
The return you receive on an ETF investment is based on the type of investment you make. A stock investment, for example, will deliver returns based on both the capital gains and the dividends of a stock. A bond investment (such as real estate) will deliver returns based on property sales, rents, or any service income generated.
Peer-to-Peer (P2P) Lending
Peer-to-peer lending (also known as P2P lending) is exactly as it sounds: one peer (the lender/investor) lends money to another peer (the borrower) at a pre-defined interest rate. The interest rate is applied to that investment amount until the borrower is able to pay it back (known as the payback period). As a result, lenders can withdraw higher returns from the P2P lending website they use because of the applied interest.
Not all P2P lending websites are created equal. Look for answers to questions such as:
- How long has the website been active?
- Will my loan be secured?
- Have lenders lost money in the past?
- Is there a provision fund available to pay off bad debts?
- Is there a minimum/maximum to how much money can be lent?
Find out who is running the P2P lending website. Check out the website’s “About Us” section and search for information about the key people on the P2P lending management team. One thing in particular you could look out for is people with compliance experience, as that could be a great indicator of their ability to run the appropriate risk analysis to protect your funds.
Mutual Funds/Unit Trusts
You can get the best returns on your investment by choosing to invest in companies that either conduct business operations across all of Europe or those which are headquartered somewhere on the continent. You can then use your funds to purchase a variety of shares which can be later sold at a higher price.
The nice thing about mutual funds or Unit Trusts is that you can choose to invest in three different “types” of trusts, including:
- Trusts with an immediate return (i.e. Global Bond)
- Trusts with growing returns (i.e. Equity income)
- Trusts with capital growth (i.e. Global Growth)
Keep in mind that there is a minimum investment amount, and this amount can vary widely from as little as 250 to 1000 pounds (approximately 300 to 1150 Euros) or more.
Direct Stock Market Investments
The stock market has delivered some phenomenal returns for investors in 2019. One country that is getting a lot of attention lately is China.
China has been quite volatile this year, which is why many investors are shying away from investing in Chinese equities. But savvy and experienced investors are choosing China for a couple of reasons, including:
- It’s inexpensive. The China H Shares Index shows that Chinese companies are trading 8.5 times forward earnings.
- Eased monetary conditions. Last year many equities, including Chinese equities, were being squeezed by tightened financial conditions. But the European Central bank’s bond-buying program and the Federal Reserve’s reduced rates have made Chinese equities a more attractive investment option.
As a long-term investment strategy, an investment in China may lead to great returns for you over the next decade and beyond.
