There are lots and lots of investment options on the market, but they all fall into the same old categories of stocks, mutual funds, indices, real estate, etc.
Alternatives to these common investment options are rare. But every once in a while, we do see new categories reach the market. There is a good reason to take note when this happens, as being in from the infancy of new investment can yield stunning results.
Today, I got three fairly new (well, at least two fairly new and one less so) investment ideas to share with you. They are not new as in yesterday´s news, but compared to traditional investment options, I think it´s fair to consider them relatively new.
So they have been around for a while and bitcoin is probably still the most popular one. And although the price per bitcoin is significant higher now compared to the day of inception, it might still be cheap – who knows. Last time I checked, the price was just around $400 for a bitcoin which at first sight might seem expensive, but considering the price has been over $1,000 per coin not too long ago, some might consider it cheap. Determining the “right” price or expected future price of a crypto currency is no joke – this is specially true since most people don’t even understand what a crypto currency is. So stacking up on bitcoins might not be the best idea.
But due to the peculiar nature of crypto currencies and the novelty, there might be lots of other ways to take benefit from this new designer currency. Arbitrage for one, seems like a pretty good bet. Bitcoins are traded on different exchanges and prices deviate heavily! This makes bitcoins a brilliant currency for arbitrage trading – Purchase bitcoins at a cheap exchange and immediately sell them at an expensive exchange. It sounds easy and in theory it is. In practice however, there is more to it than this. You need to transfer funds back and forth between the exchanges in order to execute the deals and this will cost you. But as long as the cost of transferring funds are cheaper than what you make from the arbitrage, it´s a solid “bet”. Another important thing to keep in mind is that there are a lot of sketchy “businesses” out there dealing with bitcoins so you need to be leery with whom you are dealing with.
Equity Crowd Funding
This type of investment has also been around for some years, but up until the middle of 2015 it hadn’t been an option for most people. In the middle of 2015 the SEC finally allowed non-accredited investors (you and me) to invest in equity crowd funding. Most people are familiar with the crowd funding site KickStarter, and while it is a brilliant paltform, crowd funders cannot get equity in the startups. Equity crowdfunding allows you to do that – invest in ground floor opportunities and get equity in return. If you are good at spotting the next trend and got some dollars to invest, this might be worth a shot.
Keep in mind though, that spotting the next uber, facebook or google might seem like an easy task but the short version is, it´s not. There are lots and lots of new startups, every single day. Picking the ones that will do just fine will be tough! Finding the ones that will do exceptionally well, will be extremely tough! Keep in mind that ideas are basically worthless – execution is everything; and while the pitch might look good, the true potential is much more dependent on the people behind the idea.
New? Well no, not really. Websites have been around for many years, but while websites are old news, the idea of website investing is a bit more unusual. Although some people have been purchasing, maintaining and growing websites from an investing perspective for years, its isn’t common practice. There is a good reason for this; while the nature of several investment options are fairly passive, website investing isn’t; actually it´s quite the opposite. It requires specific knowledge with regards to optimize and maintain sites, and naturally, a lot of work and time.
Due to the above-mentioned factors, I think there is a really good reason to consider this option as a good investment opportunity. If you can spot sites for sale at a steal, optimize the site and establish ways to automatically maintain the site, this alternative investment could yield returns second to none – relative to the initial cost of acquisition.
George Do runs an awesome site over at wired investor where he blogs specifically about this topic. He highlights this exact point with a real life example:
This is where it gets exciting. In January of 2015, I bought an Amazon Affiliate website for $1600. So far, this investment has netted me 32.5% (as of April 1st, 2015). You’re probably thinking that that’s pretty good. A 32.5% annual return on investment would be a stellar year for any professional investor. But wait…
The 32.5% that I made- that’s not annualized.
That’s right – in the 2 months since I bought this particular site, I’ve made 32.5% on my investment already. This kind of return is practically unheard of. Let’s translate that into an annual figure:
32.5% of $1600 = $520 in the 2 months since I bought this web property.
If we do the same for the next 10 months, that would be one full year since I bought the site.
260 * 10 = $2600 + $520 = $3120
That means I would have made an annual return of almost 200%. Keep in mind – the site has not been resold at this point – in Stock Market terms, over the course of 1 year, I’ve received almost 200% of my original purchase price just in dividends – I haven’t even included any potential capital gains on the asset.
If you told a finance professional that you had the ability to achieve these kinds of returns consistently, you’d get laughed out of the room – and yet, there exists an asset class in which these kinds of returns are possible.
I personally think this type of investment is very exciting and something I plan to pursue going forward. Because of this, you can also expect to see more information on this topic going forward. But for now, I suggest you give Wired Investor a read, if you want more actionable information on this topic.
That is it for now. In the next post I am going to look closer at a new forex signal service. Stay tuned.
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