4 online investments you’ve probably never heard of
There’s a world of opportunity out there when it comes to investing, so much more than just maxing out your 401(k) or getting a savings account that barely offers a decent return. If you want real earnings, it’s important to think outside the box when you’re thinking of ways to invest your money.
Let’s take a look at some great online investment ideas that you’ve probably never heard of that could make you some great returns in 2020.
There’s no doubt that art can be a lucrative business– in the last ten years alone, pieces have been sold at auctions for hundreds of millions of dollars. Most people don’t have the capital required to buy top quality artwork outright, but in the digital now they don’t need to.
One company called Masterworks decided to join the worlds of art investing and crowdfunding. On their site you can buy shares of individual art pieces. They identify pieces they believe will be the best investments and commit to paying the asking price. They then offer shares to their users, who can buy as many as they like. Once the funds are raised, they buy the piece in the hopes of reselling it later for a profit.
It has to be said that this isn’t a short term investment. The company’s plan is to hold each painting for between 3 to 5 years and display it at their gallery (based in SoHO, New York) while it awaits a buyer and accrues in value. When it’s sold, each investor is given back the percentage they put in, often yielding a tidy return.
It’s worth noting that Masterworks is a business too – they take their cut and it’s not cheap. Firstly, the minimum initial investment is $1,000. Then, whenever a piece sells, they take a 20% commission. Finally, they charge an annual fee of 1.5% of your total investment in the company (so a minimum of $15) for maintenance costs, like insurance and storage. It’s an interesting prospect, but only for those sure of appreciation.
Real Estate Crowdfunding
If the thought of shares in art doesn’t float your boat, then there’s always the option of real estate. Property is often cited as a great investment idea. However, If you don’t have the capital to buy a whole piece of real estate, then you’ll need to take on the additional financial burden of a mortgage. Also not to mention taxes, fees, and any repair costs.
In order to avoid that level of responsibility but still get a nice return on your investment, you could consider buying shares in property or land. Similar to my previous example, the goal of many real estate platforms is to crowdfund the capital to buy assets that are either undervalued or likely to increase in value in the near future. They flip these later for a nice profit.
Fundrise is one of the most popular of these sites. They’ve averaged between 8.8% – 12.4% annually, since they started up in 2014. They’ve also paid out $79 million in dividends over the same period.
Another suggestion for a great online investment is commodities. Essentially, they are goods or services that are relatively interchangeable. The majority of commodities come from either mining (known as hard commodities) or agriculture (so-called soft commodities) and are used and traded internationally.
Arguably the easiest way of getting involved in commodities is through commodity ETFs (exchange-traded funds). ETFs are traded like stocks and can either be focused on one commodity, such as gold, or function as mini-portfolios with a diverse range of investments. The Invesco DBC, for example, has everything from corn and soybeans to gasoline and zinc.
The advantage of commodities is there are many to choose from and they’re generally a safeguard against inflation. Their value rises alongside increases in product prices. It’s worth noting that commodities can be volatile and are affected by global geopolitics. But this can actually play to your advantage if you can foresee whether a commodity will rise or fall.
Peer-to-peer (P2P) lending already has a well-established market worth tens of billions of dollars and can offer a great return on investment.
In P2P lending, companies offer a legitimate platform helping borrowers to find a loan and lenders to finance it.
P2P companies facilitating unsecured loans generally go by credit score to dictate the level of interest given/received. Investors can choose to back riskier loans (to borrowers who have lower credit scores) for interest rates in excess of 30%. They can also back loans for people with excellent credit scores and still net at least 5.99%, which is well in excess of what you’d get from a traditional savings account these days.
Alternatively, there are companies like us, who offer secured P2P loans. Secured loans require the borrower to put up an asset as collateral rather than relying on a credit score. From the lender’s perspective, this is a safer bet as there is something tangible that can be liquidated to pay off the loan in case the borrower defaults. Our investors get a return of between 7% – 7.5% on their investment.
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