Potentially one of the best ways of making money over a long period of time is via investments. Investments can be tricky and you should only use money that you can afford to lose. Economic downturns or troubled companies can destroy share prices and see their cash turn to dust. Of course, the rewards can also be great.
Traditional investments have been made in stocks, bonds or cash. The volatile economic climate experienced over the past few years has encouraged many investors to look at alternatives to the traditional three. There are many other places to invest your funds which are safer and still have the potential to deliver decent returns. These alternatives should compliment your existing portfolio and not replace it.
Many of the alternatives to the traditional investment portfolio require larger amounts of capital initially, and may be harder to convert to cash if needed quickly. The following are still well-worth a look:
Low yields and poor quality can affect the price of even the premier wines. This fluctuation can actually assist the investor. Several low quality years will bring a price down yet the product will eventually return to form and the wine you have invested in will gradually appreciate in value. A reasonable return on wine would be between 6% and 15% annually. One bottle will not be enough to make a significant return. You will need to purchase a large quantity of a type of wine you know will be of interest to a collector in the future. Bordeaux is an excellent choice – have a closer look at Mouton Rothschild – and if you stay on top of the wine market, you will find many more with excellent potential.
A managed fund is run by one person or company who pools several people’s money. These funds are invested in a variety of different financial instruments. The funds are highly regulated and usually involve the prediction of how a certain product will do over time. In essence, the fund manager agrees to purchase a set amount of shares for a set price at a set time in the future. At the point in time that the purchase is actually made, you hope the shares are worth more than the purchase price and a profit is made. Alternatively, the shares are worth less and a loss is made. This can be high risk and the market can be hard to predict as it is different to the normal stock market.
Many companies starting up do not have the funds needed. They also often struggle to obtain these funds through the normal banking channels. A venture capitalist will finance all or part of a start up if they feel the company is worth it. When the company is ready to issue stock, the venture capitalist makes their money back and a profit. Sometimes the start up is purchased by another firm and a profit can be made this way. It is normally impossible to get the funds lent back during the first few years. It is also possible that the company will not do as well as hoped. This makes the initially funding risky and careful analysis is needed before you part with your cash. It’s not easy to make money with venture capital, but everything’s possible if you’re careful enough.
Property has always been a fairly safe bet. Prices usually rise over time and the property does not usually fall down. The economic crisis of 2008 did cause a lack of confidence in this type of investing but there are plenty of investors using this approach again. Property prices are still lower than pre the 2008 crisis and can make this an excellent time to purchase a rental property. The value of the house should rise to create a profit and it is possible to receive monthly rent payments at a higher rate than the monthly outgoings. This is a fairly safe investment technique but it is not possible to access your capital quickly.
In spite of a rather shaky financial time, there are sensible ways of making money with alternative investments. It’s all about making right choices at the right time.