Investing can seem daunting, especially for millennials. We’ve been around long enough to see the older generation lose half their stock portfolio in the dot com bubble and the global financial crisis. We’re also worried about investing in property since sub-prime loans wiped out the housing market.
However long term trends show that property and shares are still good investments, and there are other options out there as well.
If you chose to invest in property, remember that you are investing to make money, not because you like the property. Some of the best ways to make money in property involve putting your heart aside and buying the ugliest house on the street. With a little effort and elbow grease you can clean a property up and rent it out, or sell it for a profit.
While there are still plenty of overpriced properties out there, you can also snap up a deal by looking a little harder and doing some extra work. However remember to do your research, because you are taking out a loan, one poor property decision can set you back thousands of dollars, however a good one can rocket you forwards.
While most people say shares are risky, over a ten year period they show consistent strong returns. The difference lies in investing in the entire Standards and Poors 500, versus trying to pick out multiple potential winning companies that are starting up. If you can pick a winning start up just before they break into the big time you might find yourself a millionaire overnight, however this kind of investing is more likely to lead to horrible crashes, and stock worth next to zero.
For a safer option you can invest into an Exchange Trade Fund that lets you own a little bit of hundreds of companies for a small fee. Will ETFs aren’t likely to double in price overnight, they are also highly unlikely to crash unless we have another GFC. Even then if you reinvest your dividends over a ten year period, you’re likely to come out ahead.
Peer-to-peer lending has taken off in the past few years through sites like The Lending Club and SoFi. Traditionally, loans were only offered by banks and big business, but with the help of these sites, you can be a lender in part. You have all the usual risks of a loan (what if my borrower goes bankrupt!), but the returns can be much higher than shares or property, for a lot less effort.
Invest in Start-Ups
Start Engine is a crowd funding site like Kickstarter. Except on Kickstarter, you receive products when you back a project, with Start Engine you receive a share of the profits. You can invest in movie makers, tech start-ups and small businesses. If you pick your investments right you might be part of the next big thing, or you might see your investment crash and burn with absolutely no return, and no way to get your money back.
So How to Choose?
Choosing what to invest in is hard, but there are a couple of rules you can trust. Don’t invest more than you can handle losing, and invest in something interesting. If you think interior decorating is boring, don’t try and renovate houses. If you hate reading dividend reports, maybe the share market isn’t for you. If the risk of a loan defaulting scares you, stay away from peer-to-peer lending.
Each market has risks and rewards. If you are interested in your investment, then you’ll research it, track its progress and understand how it works. If you try and invest in something that bores you just for the money, you’re likely to make poor decisions.