Watch these seven best investments for 2019 and getting started investing $1,000
How to Invest $1,000 in 2019 – this is your guide to the seven best investments you can make this year, the risks, the outlook and how much you can expect to earn. This is the exact strategy I used every year while working for private wealth management, reviewing the top investments each year and the outlook for each.
By the end of this video, you’ll have an investment strategy that won’t depend on stocks, that will be safe from a recession and that will make you money.
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How to Invest in 2019
This is going to be an epic video, how to invest $1,000 in 2019, the best investments and the outlook for each.
We’re going to be talking about seven different investments you need to make in 2019 but I want to make an important point. You might not invest in all of them, but you should know about them and have at least three or four in your portfolio and I’ll tell you why.
Everything we’ve seen is pointing to 2019 as a turning point for investors. We’ll go over the risks in each investment, but those broad economic risks are building and a recession in the later half or in 2020 is looking extremely likely. That means some of these investments could start selling off mid-year so you need a mix of these because they don’t all follow the economy the same.
This isn’t going to be some generic how-to investing video. I’m not going to lecture you on paying off debt or building an emergency fund first. All that stuff is well and good, but this video is going to be pure investments.
You’ve got $1,000 and how do you invest it for the highest return possible with the least amount of risk.
It’s going to be a longer video but I want you to put it in your watch later folder because you’re going to be referring back to it all year as a complete investing guide in stocks, real estate, art and collectibles, gold, startup investing, peer-to-peer loans and business investments.
Why You Need 7 Investments for $1,000 and Not Just One
For each of these seven investments, I’ll cover the outlook, risks and exactly what you can expect for return. I’ll be hitting some deep analysis of each and how it fits with your wealth-building strategy.
In fact, this is the same strategy outlook I used to provide to private wealth clients and institutional managers. Each year, I would get the team together and everyone would take an asset class to research. Then we would round-robin each to narrow it down into a core set of investment recommendations.
I’ve included a clickable table of contents in the video description on YouTube so you can jump to the outlook on different investments but I urge you to watch all of them.
If you’ve got a $1,000 to invest, the last thing you want to do is put it all in one investment and watch that investment tumble all year. Building that portfolio of at least a few of these investments is going to smooth out those risks and get you the highest possible return.
In fact, towards the end of the video, I’ll reveal my top three investments that should be the core of your portfolio, the three with the highest potential in 2019.
We’re going to start with stocks but first I want to get your opinion to see where the community is on this, What do you think the best investment for 2019 is between stocks, real estate, bonds and gold. We’ll cover a few others but I want to get your input, of those four assets which is the best for 2019 and why.
Stock Market Outlook for 2019
We’ll start off with stocks but it might surprise you how little you should have in equities. This isn’t because of some imminent stock market crash but the simple fact that stocks aren’t going to get you where you want to be.
Scorpio and BNP Wealth Management surveyed their high-net worth clients, so this was 2,500 people with an average of $8 million in assets and found on average, the rich invest less than one-in-five dollars in stocks. The rich have just 17% of their money in the stock market and for some regions it’s as low as 14% in equities.
That’s because the rich know what we’re going to be talking about in this video, that there are other investments you can make besides stocks that will grow your money faster and will protect you from when stocks crash.
But I’m a stock market analyst, I love talking about equities and that’s where I’ve spent most of my professional career so let’s talk stocks in 2019. Since the bottom of the recession in 2009, the S&P has produced a 9.5% annualized return and tech stocks have done even better with a 15% annual return.
That is way above the long-term average gain for stocks but there’s no reason you can’t keep booking those returns, it’s only a matter of finding the stocks that will lead in 2019.
Investing over the next couple of years in stocks is probably going to be tricky though. All the recession indicators I follow from consumer loan defaults to producer prices and sentiment all point to a high likelihood of weakness in the second half of the year or 2020 at the latest and I’m not alone. The Wall Street Journal surveyed economist on when the next recession would come and found more than two-thirds were predicting in 2019 or 2020.
Now considering stocks historically have sold off an average of six months before the recession starts, that means investors need to position their portfolio for what’s going to work, and it’s not tech stocks.
My Favorite Stocks for 2019
But there is one sector that could surprise on the upside this year and beyond. It’s lagged some of the others since the financial crisis but has a clear runway going forward and that’s financials. We covered this in a previous video in our Warren Buffett investing series because banks happen to be Buffett’s biggest investments at $60 billion or about a third of his portfolio.
Most investors don’t realize just how hard it’s been for banks to make money with the post-crisis regulations. For better or worse, those high capital requirements meant lots of cash sitting around not being lent out and not making any money.
Now that’s meant the bank stocks have underperformed other sectors but it’s looking like they could bounce over the next few years. Banks are facing a perfect storm of positive factors from rising interest rates to lower regulations and fees. I’m all in with Buffett on this one and it’s my top sector pick within stocks.
Within stocks, I also like utilities and telecom. These are two safety sectors that have underperformed as the economy boomed but they’re going to be your wealth insurance if the stock market tanks. Not just that though, they’ve both got some huge catalysts for growth coming up.
For utilities, it’s those regulations that are being loosened that are going to free up cash to be returned to investors. For telecoms, a lot of them have made those big investments in their 5G network and other capital spending so they’re over a hump in big expenses. Now they’re ready to start reaping the benefits of that investment over the last few years.
Start out with investments in the sector funds; so the SPDR S&P Regional Banking ETF (KRE), the Utilities Select Sector SPDR (XLU) and the iShares U.S. Telecommunications ETF (IYZ). These are going to give you broad exposure to the sectors to benefit from the trend higher and you can pick a few individual stocks from each, the best-of-breed names for separate investments.
I’m not saying totally ignore the other stock sectors but these are going to be the ones to watch in 2019, if you’ve got limited funds to invest, so if you can only invest part of that $1,000 in stocks then this is where you want to put it.
Real Estate Investing for 2019
Those of you in the community know I’m big into real estate investing. I’ve been an investor or analyst since getting out of the Marine Corps in 2001 and I love it for long-term wealth accumulation.
Real estate bounced back after the recession and outperformed stocks for most of the last decade. We’re using the Vanguard REIT, a diversified fund of commercial property, as a proxy here and you can really see the major shift early 2017. It was here that higher interest rates started hitting those sensitive sectors like property and bonds and real estate has actually posted a negative return since though cash return has remained positive.
Now we all know that retail property has been weak for years with the malls and stores closing against online competition but the other property types are still going strong. Office and industrial are growing along with the economy while residential, hotel and storage are getting help from the consumer. Rising rates aren’t going to help through 2019 but there’s not much to change this picture and a lot of the ways we can get real estate exposure have come down from the overpriced levels in 2016.
With real estate, you’re not going to be getting much for $1,000 but there are ways you can get that exposure to this amazing asset. First there are exchange traded funds like the Vanguard REIT we looked at here, that’s ticker symbol VNQ. The fund holds shares of 185 real estate companies in every property type and spread out across the country so you get great diversification for just $83 a share.
Just like stocks, there are some of those broader risks to real estate like the eventual recession and rising interest rates. Unlike the housing boom, we’re not seeing ridiculous borrowing in property or the prices so there won’t be the bust when the economy does weaken.
Millennials are just getting into their prime earning and home-buying years so I think residential is still a safe bet as well as storage. Industrial and office property would be a little weaker in a recession but really the only wildcard is that retail property so that’s the one I would avoid if anything.
Even if we see a slowdown late 2019, you’re still going to see those solid 10% plus returns on REITs and I think you can do fifteen to 20% on direct ownership so managing a few rental properties over the next five years. I want you to be diversified here though and this is one of the most important things in real estate is to have some direct ownership in properties but also investing in REITs and maybe some real estate crowdfunding so you get that exposure to different property types in different regions.
Buying Art as a 2019 Investment
Our next investment for 2019 is a fun one and one that kind of blurs the definition of what we usually think of as investment but according to a study by researcher DALBAR, art has been a solid investment. This study was over the decade through 2013 and you can see that fine art produced an annualized 7% which beat out just about everything else except the U.S. stock index. The big winner here was Chinese art from the boom in demand from a growing class of Chinese rich.
Now I’ve seen other studies that claim different returns from around 10% to one by Stanford University that claims 6.5% annual returns on art. Either way, that’s a solid return from something that’s producing something other than just a monetary return, right?
The great thing about art or any collectibles is that you still get that enjoyment from them when the investment return isn’t right. The economy can go to crap but you can wait for the return to bounce back and it wouldn’t matter because that Banksy is still a conversation piece whenever someone visits.
The main way to buy art and other investment collectibles is through an auction house, this is probably the best because you have some guarantee that it’s authentic and has some value. There are regional auction houses and these can actually be better deals than the big markets in New York or LA.
There are private investment groups you can join and this is a really good idea for beginners because you get a crash course on what’s valuable and you can pool your money to buy something a little higher ticket.
Of course the risk here is that your chihuauhua in a tea cup painting is never worth more than the tea cup or the chihuahua. A lot of art doesn’t appreciate and it’s just as bad or worse for other collectibles. My dad and I had 12 boxes of comic books collected up to the early 90s but only a few of the individual comics were ever worth much of anything.
So this is one where you need to know a little about the investment, what has it sold for in the past and why. It helps to be a part of an investor group or a club to learn these things and it can actually be a lot of fun learning and hunting for investments.
Keep this one more as a hobby investment to start, take your time and maybe get a few pieces but stick with the financial assets for most of your money.
Startup Investing in 2019
This next investment is going to factor in heavily in those 10 wall street lies I’ll be revealing later in the video. In fact, this is probably one of the worst on the list that keeps regular investors out of the investments that make the rich even richer.
Our next investment asset is equity crowdfunding. Remember that table of where the rich invest their money, this is that startup investments. Equity crowdfunding is just like venture capital where you are investing in early-stage companies that haven’t hit the stock market yet.
This is where I’ve spent a lot of my time working and it’s an amazing area of investing. This is how Mike Markula turned $250,000 into $200 million in just three years after he became the first outside investor in Apple. This is how Peter Thiel made $2 billion, 40-times his investment, when he got in on Facebook for what amounted to about a penny per share.
Because the government doesn’t trust regular investors, anyone with less than a million net worth can’t get into this world of venture capital. For a lot of years, I advised VC firms and private investors but couldn’t even invest my own money.
That’s where equity crowdfunding comes in. Through websites like EquityNet, CircleUp and IndieGogo, you can invest in startups and get a piece of these companies before the market. These are small companies just starting out and include everything from film projects to digital platforms and distilleries.
It can actually be a lot of fun looking through these different startups and becoming part of one through an investment. But startup investing is one where you really have to be careful, even more so than with stocks as you get further into an economic cycle. These companies are just starting out and many don’t have that financial flexibility to withstand a recession.
When you’re looking at crowd investing deals, you want to be extremely picky and only invest in the ones with strong financials and a competitive advantage. I won’t try to talk you into investing in crowd deals. It’s a job in itself to analyze these deals and you don’t necessarily need them in your portfolio.
I will say that the returns are amazing though. A study by Willamette University found the average returns on angel and venture investing were around 26% annually and that’s accounting for the fact that the majority of your investments are going to be duds. This graphic here shows that 55% of the deals return less than the investment while another 35% might return the original investment up to five-times your money.
But it’s those big winners that average out the returns to 27% a year. That one-in-ten investment that returns 10, 20 and 30-times your money.
I’ve got a video that goes a little deeper into analyzing these deals including how to look at the financials and making sure management is on point. I’ll leave a link to that in the description below as well as a link to this book, Investing in the Next Big Thing which details my entire process analyzing startup investments, everything I used when I worked for venture capital investors.
Will Gold Prices Increase in 2019?
Our fifth investment for 2019 is gold. It’s amazing how quick all the shady gold investing newsletters and coin dealers went away when the price crashed from $1,900 an ounce in 2011. Since 2014, gold has done absolutely nothing.
There are a few factors holding gold back from being a viable investment but there might be some clues emerging that things will change next year.
First is inflation which has been pretty much non-existent since the end of the recession. As a real asset, one of the big selling points for gold investment is inflation protection so that’s taking away a reason for prices to head higher.
The other factor holding gold back is a trifecta that are all related; higher interest rates, a stronger dollar and a relatively strong economy. That strength in the economy is causing the Fed to raise rates which in turn pushes the value of the dollar up against other currencies.
The problem for gold is three-fold. First, a strong economy means lots of other investment choices in stocks and other assets. Gold has no appeal as a safety asset investment. Second, because holding gold doesn’t pay any return until you sell it, those higher rates make other safety investments like bonds more attractive versus the yellow metal. And finally since gold is priced in dollars, as the value of the greenback goes up, the quoted price of gold goes down.
All this and you wouldn’t think gold would be on a list of 2019 best investments but those factors could change very quickly. We’re already seeing the beginning stages of higher inflation with consumer price inching up past three percent. A trillion dollar annual deficit is going to start weighing on the economy and other investments which could bring back that appeal for a safer investment.
The best reason to put gold on your radar for part of that $1,000 investment is that nobody sees it coming. The price of bullion has done nothing for five years. Gold miners like GoldCorp are profitable at $1,200 an ounce but the shares have been absolutely hammered.
Here’s GoldCorp, down 80% since the 2011 peak and down 27% just from the 2018 February high. This is a $9 billion company with solid fundamentals that used to pay a monthly dividend and investors have completely written it off.
Now I wouldn’t be investing directly in gold because it pays no dividends while you hold it. If you want to invest, go for those miners that are profitable so you get the dividend yield and a lottery ticket on higher gold prices.
How to Invest on Lending Club in 2019
The sixth investment we’ll talk about here before getting to my top three ways to invest $1,000 in 2019 is going to be peer-to-peer lending on Lending Club.
There are a lot of haters out there talking about how p2p loans are a bad investment or that returns have been coming down but I haven’t seen it. I’ve been investing since 2015 and returns have been consistent around 10% a year.
The reason why a lot of investors may be seeing lower returns is because they’re not using a loan filter to manage which investments they buy. Yeah, if you just invest in any loan on the site, you’re going to get the crap with the good.
That’s why I developed a loan filter that puts me only in the best loans, keeps me out of the ones that are going to default and keeps my returns high. I revealed that loan filter in another video and showed you how to set up the automated investing tool to make p2p a completely hands-off investment.
I will say there are some risks in p2p loan investing as we head into 2019. We’re seeing charge-offs increase in both consumer loans and credit cards, so defaults on credit cards is up to 3.6% and consumer loans up to 2.2% here. Consumers are stretched thin and without wage growth, there could be some pain in p2p loans.
But you have to compare that to what’s going to happen in stocks if people start not paying their debts and we head into a recession. Stocks could easily crumble 50% like in 2008. While that 10% return on p2p might halve, a lot of those people are still going to be paying their debts so it’s not the risky investment a lot of people are trying to make it.
How to Invest in Your Own Business
Our last investment, and this one isn’t a traditional investment like the others but it’s one you should consider is an investment in a business. If we go back to that table of how the rich invest just one more time, we see that the millionaires of the world have a quarter of their wealth in their own businesses.
That’s more money than in any other investment; stocks, bonds, real estate, anything. That should tell you something. Most people wait for someone else to make them rich. They invest in stocks of a company and expect that company’s management to produce profits that will make the investor rich. Instead of waiting around sitting on their ass, the rich are making themselves richer by investing in a business.
I made a lot of money as an equity analyst but it was a fraction of what I make now with my online businesses. Best still is that my businesses have grown to a point where I can sit back and relax and they’ll still cash flow. I don’t , because I’m stupid like that, I need that adrenaline from working hard and building the business, but I could if I wanted.
So just one more resource I want to point out before we get to those top three investments. I recently finished a video that lays out a blueprint for the characteristics you need to develop and three business models I’ve used for six-figure income. This video walks you through not only those three business ideas that anyone can use but also the action steps that are going to make you successful.
My Three Favorite 2019 Investments
Now, you’ve only got $1,000 to invest, you’re not going to be in all of these. That’s fine to start with. I want to share the three best investments that will get you started and then you can invest in the others as your wealth grows.
First off, understand it’s not going to be stocks. In a good year, stocks might produce ten or twelve percent return but there are some very real risks in 2019 that could hold them back. I’m not predicting a full-on crash but things could get dicey in the second half as investors look to that 2020 recession risk.
As much as I love the potential in equity crowdfunding, you’re not going to get much for $1,000 – let alone a few hundred. That’s fine. The beauty of this startup investing is that there will always be companies raising money from investors. Wait a year or two when you’ve got more money, when a recession has kicked the butt of most new companies and then get in on some great deals. Same goes for art, you’re just not going to get much with a grand.
We’re down to gold, real estate, p2p investing and your own business.
Gold and real estate were the heads-up tie. There are strategies I share in that previous video you can use to invest in property with no money and I truly believe everyone needs real estate in their portfolio. But there’s a reason why I’m going with gold in my top three investments for 2019.
First is that contrarian opportunity in gold. Nobody thinks it will do much. Everyone has written off the gold miners so you can get some great deals on their shares. You can invest in a few individual companies like GoldCorp as well as the VanEck Vectors Gold Miners fund, ticker GDX, for a broad diversified bet.
With gold, there’s that upside potential but also another reason I’m recommending it along with our other two investments but let’s look at what those are first.
My other top picks for that $1,000 are p2p loans and your own business. P2P offers a great mix of that safety from a fixed-income investment but returns that are similar to stocks so it’s really the best of both worlds.
With that business investment, I want you to stop waiting for someone else to make you rich. By creating your own business, you’re going to be creating those assets that will work for you long after you stop working.
So there’s a method in my madness here, why I picked these three investments over the others and it goes back to that way the rich invest. The reason why the rich have so little in stocks is because they already have a lot of risk in their own business and other business investments, they don’t want a lot of risk in their financial assets as well.
With these three investments; gold, p2p and your own business, we’re balancing risk and return. An eventual recession isn’t going to hit your gold and p2p investments as hard as it would stocks and they’ll continue to cash flow. In fact, a recession could be a good thing for gold sending prices way up as a safety asset.
Investing in your own business is riskier but it’s something you can do with little money and the return potential is well above any of these other investments.
Be sure to check out those resource links I left in the video description for some of these investments. Again, if you only have $1,000 to invest in 2019, I would go with these top three but all seven should be on your radar. This list of best investments is going to build a diverse portfolio with the potential for high returns and protect you from a stock market crash.