Investing is a meaningful way to add equity and wealth over time, giving individuals the opportunity to grow their money and provide for family and retirement.
But for some, the traditional way of investing in stocks and bonds doesn’t add up, or others may be looking to diversify their holdings to minimize risk in any particular investment.
Thinking outside the box for investing ideas is an excellent strategy to have.
Real Estate as an investment can be very lucrative over the long haul. Typically, real estate can appreciate over the length of ownership at rates from 5-10% depending on the specific market of the home.
Real Estate as an investment opportunity helps provide opportunity by:
Provide Long-Term Wealth
Stable Income Opportunities
Leveraging Of Finances
Real Estate as an investment can be in the form of:
Buy-and-hold: A buy-and-hold type of investment can take one of two different paths. You can purchase real estate and hold onto it, live in it, and pay down the loan. As the loan decreases and your holding appreciates, you gain value and equity.
The other option with real estate is to buy and rent. Renting a property provides multiple income advantages, from stable monthly income to tax write-offs.
Flipping: Flipping is the process of purchasing a property at below market value to put some investment into it, with the goal of selling it for above market price.
This form of investment in real estate takes a lot of skill in understanding the market, networking, and improving the property to resell.
Wholesaling: Wholesaling is the process of investment where you act as an agent between the seller and a buyer being paid an assignment fee for brokering the transaction. In effect, you’re using this process to flip real estate contracts.
Seller A is looking to sell, you as the intermediary, agree to find a buyer acting as a “bridge” between the two parties. As the intermediary, you never actually take hold of ownership, minimizing your risk in the transaction.
To bring the transaction to a conclusion, you’re paid an assignment fee, sometimes known as flipping real estate contracts.
The added luxury of real estate as an investment is that there are multiple entry points to ownership.
REITs And Crowdfunded Real Estate
REITs are an organization that owns, operates, and sells various real estate holdings. It is a legal entity that is a form of crowdfunding where investors contribute for a percentage of ownership.
Cryptocurrency is becoming quite popular for the average investor and professional alike. Of course, the boom-bust cycle of the investment does turn off many people, but the ease of entry and the potential for huge gains is very attractive to some.
As opposed to traditional currencies that a government institution backs, crypto is decentralized, making it volatile, and that volatility for massive gains and losses is what makes it attractive to speculators.
Right now, all the rage is the NFT, which stands for Non-Fungible Token. In English, an NFT is a digital form of data stored and able to be bought or sold. Examples of NFTs are pictures, videos, and audio as digital files stored on a blockchain and can be transferred in ownership.
Another form outside the traditional investment realm is peer-to-peer lending. With peer lending, an investor either individually or crowdfunds another seeking a secure loan through a third party at a percentage rate lower than traditional forms of lending.
Organizations such as KIVA, a non-governmental social organization, act as an escrow for the two parties, holding the loan as security and paying the lender as the loan is repaid.
A commodity is considered an economic good or service such as metal, gold, silver, oil, soybeans, wheat, and others.
The advantage of investing in commodities is that they are stable investments but do have slow growth. They act similar to a CD at a bank, offering low-risk, low-yield investment opportunities.
Thinking outside the box: diversifying your investment opportunities should include a mixture of safe investments that yield a lower return with a more aggressive risk-reward mix. The concept of diversification is to spread out your money to limit the exposure to potential risk if there is a crisis or turmoil in any particular sector.