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Things You Can Invest In To Generate An Alternative Income
This Hub is dedicated to show you the variety of things you can invest in. Many people limit themselves to stocks and bonds, but I will divide this article into two parts. The first part will be the safer investment options, and the second section will be slightly riskier options but with a better return if the correct and appropriate investments were made.
Many people believes that investing is like gambling in casinos, but unlike trading, investing is a long term engagement in a particular security. So you don't have to worry about whether a stock is up or down intra-day, but instead, you will be focusing on the long term (anywhere from a few month to a few years!).
But what people missed is that investing in anything could bring you a significant income that others have missed!
Stocks and Securities
Stocks are the most common thing people think of when they hear the term 'investing'. The process of investing in the stock market is relatively easy compare to many others. In the twenty first century, all you need now a brokerage account, an internet connection and knowledge in the stock market. There are many great investors who's story are so inspiring, the most commonly known is perhaps Warren Buffett, the legendary investor. But you must understand that nobody is one hundred percent right in the stock market. If your investment doesn't go as planned, don't be afraid to take that loss. But the most important lesson is that: make sure you analyse where you went wrong and how can you refine your strategy. There are many reasons why some investment doesn't work out, sometimes it might not be your fault. But investing in the stock market is more about the fundamental aspect of a business instead of the technical aspect.
This is perhaps the safest investment option worldwide. Bonds comes in different forms. There are government bonds, which means you are loaning your money directly to the government. And there's also company bonds. This is where you loan your money to a particular company that you believe is capable of returning the money after several years. Bonds might be used for may different reasons and it varies greatly between corporation bonds and governmental bonds. Genially speaking, governmental bonds are a lot safer that corporation bonds, but the interest rate will be a lot lower. So there's not difference between a governmental bond that saving your money in a bank account. However, the interest rate varies between country and country. And the country with the highest interest rate might not be the best option, because if the interest rate a lot higher that other country's, there must be something wrong. The chances are the country is in crisis and the government requires capital immediately. So be cautious when buying bonds. Same for corporation bonds, always research well before you make an action. 'If a deal is too good to be true, then the chances are it is too good to be true.'
Real estate (buy-to-let)/House Flipping
Buy-to-let is a massive market, this is one of the most poplar way to obtain passive incomes. But just like any other investments, either you come in with a ton of money or you will be patient and watch your portfolio gradually growing. The waiting period can be a tedious process, and it requires a lot of determinations to be able to eventually make a lot of money. If you have used a loan or a mortgage in order to purchase a house, you will find yourself using the money from the rent to pay the mortgage. So in order to start generating income faster, you can start with a cheaper house and the mortgage will be pay a lot sooner. But even if you have paid al of your mortgages, you will still find that the rent money will only cover a small part of your expenses. If you have a full-time job, then this investment is perfect for you. Because it doesn't require constant attention and it adds to your monthly salary. But don't even think about leaving your job when you only have one house. Consider to be a full-time land lord when you own at least five houses.
Apart from buy-to-let, if you have the skills of flipping a house, it could also make a ton of money for you! After flipping a house, you can choose to sell it can get your profits instantly or you can rent it to accumulate a passive income stream.
Film and media productions
This is a very risky sector to be investing in. If the film performs well, then you will receive a lump sum after the release of the film. But just bear in mind that about seventy percent of the film productions lose money. But if you invest in large, well-known films with popular actors and an experience director, your profit is going to be huge. Investing in large films are not easily accessible to the general public, so you will have to make some significant connections in Hollywood in order to even get close to the deals. The thing that determines whether if a film is going to generate money is not only the box offices, but also from company advertisement and endorsement. Just think about it, how many times have you seen large company logos flashing before your eyes, and sometimes maybe you want to try that product as well? But in reality, the production teams didn't use the particular brand of product jut because that they think is fit, or because they like it. The real reason is that they get paid to put a particular product in the film. So you can also check the advertisers of the film before you make any decisions.
Art and collectibles.
You might have heard about super rich businessman buying arts, antiques, first edition books etc. They are not just buying them because they have a good taste in art, but they are hoping that what they have bought will grow in value and they can eventually sell it for a profit. Some people are very lucky to be able to stumble upon a value piece of antique, but not everyone have the same opportunity. If you are into things like arts, then you can go out and look around to see if you can find any valuable stuff that nobody else has noticed, if that happened, you can purchase something that could be invaluable for a very decent price. One of the best place to look is auctions. Normally people who needs money are people who doesn't like a particular piece of furniture in their house will chose the method of auctioning it. Because one, there's a big chance that people might be interest and there's a higher chance of selling it at a great price. Now the seller might not know anything about antique, so this is where you comes in and snatch a great deal before you miss it. And then after a few years, what you have bought might be worthy double the price you have paid for, so if you sell it then, you will also stand a great chance of making money.
Initial Public Offering is an extremely risky business and it would not be a good investment option for someone who has never learned about business in depth. Many businesses will fail in their early life, and some will go on and flourish while earning millions for their initial investors. For the public, IPO can be hard to analyse as it's the first time a stock will be sold to the public. There are no history nor statistics, there will be lots of speculations from institutional investors. Thus making it doubly hard on individual investors. So to invest in IPOs, you will need a solid knowledge base on business and especially startups. Make sure you understand the industry thoroughly in order to value a stock so it reduces the chance of you making a wrong decision.
Which one of the above is your favourite investment idea?
There are a lot of work to do before you invest. One thing to be careful of is that there are a lot scams out there, who tells you that they are some experts and they can make you rich. You have got to be critical, rational and even cynical about them because at the end of the day, everyone wants to make money and anyone who tells you that they can help you in making money is probably trying to lure you into a massive trap. And once you are in that trap, it's going to be hard to get out. So you must do your due diligence yourself because you can trust your own work more than anybody else's.