Investing can feel intimidating, especially if you’re not sure where to start. Fifty percent of surveyed millennials avoid investing altogether because of their fear of losing money to a bad investment.
The truth is, avoiding investing altogether can cost you a lot more in the long run than a few missteps on your investing journey ever could. Compounding interest ensures that people who start investing sooner end up saving more cash with less effort than those who put it off. The trick isn’t to avoid risk, it’s to take advantage of investment opportunities that can deliver high returns while also lowering your risk by diversifying your portfolio.
No investment is a sure thing, but this post will walk through some high-return investments you can leverage to reliably build wealth and set yourself up for financial freedom.
What Are High-Return Investments?
Before we really get started here, let’s first define what a high-return investment is. How do you know if an investment is “high-return?” The frustrating answer is… it depends.
Whether or not an investment is “high-return” depends on a few things: Your expectations, the level of risk you’re willing to undertake, and the asset class you’re considering. Depending on your answers to these items, you can find high-return investments in every area of investing.
We define a “high-return investment” simply: A high-return investment is a good deal.
Looking at investing through this lens can open you up to a world of opportunities. After all, you don’t need to be an investing expert to find a good deal. All you need is knowledge or understanding that gives you an edge over other investors. For example, if you are interested in investing in real estate, start by exploring real estate in your own area: You know what constitutes a “good deal” in your area better than any hot-shot New York investor.
Tribevest’s mission is to make wealth-building accessible and possible for everyone, and we know that the first step of your wealth-building journey is educating yourself on the different investment opportunities that are out there. Once you’re armed with that information, you’ll be able to decide which investment is right for you.
Let’s start by examining six high-return investments you may want to consider if you’re looking to build a diverse portfolio.
1. Common Stocks with Dividends
Let’s start out with something simple: Stocks.
To be clear, if you’re looking for massive, speedy returns, stocks are likely not going to be your best option. However, if you’re looking for a lower-risk investment with slow and steady gains, the stock market is a great place to start.
On average, stocks will return at a rate of around 10% per year. Note that this is an average annual return calculated over the past century, so you’ll have years where you lose value, and you may have years where you see more of a return.
Changes in the Stock Market
One significant downside of the stock market is that stock returns aren’t what they once were. In the past, you were able to purchase stocks of fledgling companies as low cap stocks and watch their value skyrocket as that company went through a period of explosive growth.
Nowadays, newer companies stick with private funding for longer periods of time, only becoming publicly traded when they are large and fairly stable in their growth. There are half as many publicly traded companies today as there were in the 1990’s. Stock market investors never got a shot at investing in companies like Uber or AirBnB in their infancy.
If you want the explosive returns associated with investing in a company at the ground level, stocks are not likely to meet those needs.
Who Should Pursue This Investment?
Who should be considering stocks as an investment opportunity? Truthfully, most investors will devote at least a portion of their investable income to stocks. If you have a 401K, IRA, or another similar retirement account, you are already investing in the stock market!
As far as who should pursue this as their primary investment opportunity, our opinion is that no one should be putting a majority of their investment budget toward stocks. However, if you are incredibly risk-averse and have a small amount of capital, stocks may be a good option for you to start with.
2. Venture Startups
Earlier, we discussed the fact that new companies with the potential for explosive growth don’t end up trading on the stock market these days. That’s what brings us to venture startups—investing in a new business directly.
This type of investment will be Pre-IPO. This means that you will be buying into the company before shares are available on the stock market. People who make this type of investment are often referred to as “angel investors.”
You should note, if you are non-accredited, there are limits placed on the amount you’re able to invest in venture startups.
- If your income or net worth is less than $107,000, you can invest either up to $2,200, or 5% of your income or net worth (whichever is less).
- If your income or net worth is greater than or equal to $107,000, you can invest up to 10% of your income, but cannot invest more than $107,000 regardless of how high your income is.
Angel Investors
What is an angel investor? Traditionally, an angel investor is a wealthy individual who uses their net worth to front funds for a young business. These funds are given in return for a stake in the company. Angel investors can be passive, but often this type of investment is more on the active side, as the investor has a financial interest in the success of the company.
Who Should Pursue This Investment?
As a lone investor, you may not have the funds to pursue this type of investment. In this case, you have a few options. You can either invest with strangers by checking out crowdfunding investment sites like SeedInvest, or grow your wealth with a group of trusted friends or family members by Tribevesting.
On the whole, investing in a startup is riskier than investing in stocks, but you do have the opportunity for explosive growth and massive returns. It’s important to note that an investment you make in a startup will be illiquid. This means it won’t be easy to get out of this investment if you change your mind. Once you pull the trigger on a venture startup investment, it’s best to assume your funds will be inaccessible for at least three to five years.
If you’re looking for an opportunity to invest in an idea you believe in and an opportunity to see potentially massive returns on your investment (and you don’t mind a little risk), venture startups might be the right investment for you.
3. Cryptocurrency
Cryptocurrency is considered a next-gen asset. Cryptocurrency refers to any type of currency that exists virtually. It isn’t regulated by any centralized authority or government. Instead, cryptocurrency is exchanged directly between peers, and validated through cryptography to ensure its legitimacy.
Though cryptocurrency is all the rage these days (and for good reason), it’s important to approach investing in crypto in a measured way. In short, “high risk, high reward,” is the motto of a lot of cryptocurrencies. Though some of the more established currencies, like Bitcoin, are fairly stable, there is still an incredible amount of volatility in the crypto market. It isn’t uncommon for a cryptocurrency to have a return of 300% one month, then plummet to a loss of 20% the next.
In other words, timing is essential when it comes to investing in crypto.
Benefits of Cryptocurrency
The experts of cryptocurrency investing are radically different from investing experts in other asset classes. If you’re looking to improve your knowledge when it comes to crypto, social media platforms like Discord and Reddit are your best bet. That doesn’t mean you should trust all the advice you see online—ensure you’re approaching all crypto advice with a healthy dose of skepticism!
Aside from the potential for massive returns, cryptocurrency’s decentralized structure provides a few more benefits. Firstly, where stocks or venture startup investments are long-term investments, you can trade crypto quickly, even buying and selling within the same day for a profit, in some cases.
Additionally, crypto’s blockchain technology means all your transactions are direct—peer-to-peer. You don’t need to wait multiple business days for transactions to go through, you can process transactions immediately.
Who Should Pursue This Investment?
Our recommendation for crypto is to do your homework before you start investing. If you’re interested in an investment with the potential for a quick turnaround and you don’t mind a healthy dose of risk, cryptocurrency might just be the opportunity for you!
Another advantage of cryptocurrency investing is that the barrier to entry is lower than many of the other assets we’re discussing in this article. Though you can always Tribevest to reach those higher asset classes, you can also pursue smaller-scale investments solo.
4. Private Equity
Not sure about investing in a startup? Maybe investing in a mature company is a bit more your style.
A mature company is a well-established company—a known entity. But wait, you say, wouldn’t a company like that be publicly traded?
In many cases, yes. However, you can invest in something known as private equity. When you invest in private equity, you contribute to a fund that buys out companies on the verge of dying out. When the company is purchased, it’s no longer listed as a publicly-traded entity. At that time, private investors—like you—can provide funds to get the company back on its feet.
These funds can be used to bring in new management, implement new technology, or any other number of steps that may be necessary to bolster the company so it can be profitable on its own, or sold to a new parent company for a higher price.
Who Should Pursue This Investment?
The buy-in prices for private equity aren’t cheap. Private equity firms are looking for investors who are able to invest in the millions, though some have dropped minimums into the $200,000 range.
In short, this type of investment isn’t for everyone. You have the possibility to gain massive returns, but the price tag upfront partnered with the risk of investing in a leveraged buyout is enough to turn many investors away.
5. Real Estate
Real estate may seem intimidating upfront, but it is actually considered a low-risk investment. The other opportunities we’ve discussed so far in this article are all intangible. You can’t hold a Bitcoin, and if your venture startup ends up going under… poof, your investment is gone.
When you invest in real estate, on the other hand, you’re investing in something tangible. You’ll be able to purchase insurance to secure your investment, and even if the very worst-case scenario comes to pass, you still own the land your property sits upon.
Real estate investing is also a great opportunity to make passive income. With the other investments we’ve discussed in this post, you’ll need to sell those assets to earn a profit, with real estate you can maintain your asset while earning income from it at the same time.
Options for Real Estate Investors
When you invest in real estate, you have a number of options for what you can do with your property. Let’s list a few:
- Live in it: Your investment can serve as your primary residence.
- Flip it: You can purchase a fixer-upper, make improvements, and sell it for a profit.
- Rent it: Rent the property out to tenants, charging them a monthly fee. The rent your tenants pay can cover your mortgage payments and more, providing you with passive income.
- Make it a short-term rental: List your property on AirBnB or VRBO to rent it out by the night. This option is especially effective if your property is located in a tourist-heavy area.
- …And more!
Related: A group of pre-schooler dads come together to invest in real estate
Who Should Pursue This Investment?
Real estate investing is a great opportunity that almost any investor can take advantage of. There is a significant amount of capital required upfront, which makes this type of investment an excellent candidate for Tribevesting. Pool capital with a group of friends or family members to purchase a property and reap the benefits together.
The trick with real estate investing is to find a deal that will provide monthly or quarterly cash flow to you and your Tribe. With the right properties and the right Tribe, you can supplement your regular income with the cash flow you receive from income properties and real estate investments.
Related: How to Build Wealth Masterclass
6. Fine Art & Collectibles
This last investment option is best for those of you out there with specific niche interests and passions. This asset class includes investments like fine art, wine, baseball cards, and racehorses. Those are just four examples—there are thousands of other collectibles you can turn into a high-return investment… if you have the right expertise.
Who Should Pursue This Investment?
To answer this question regarding fine art & collectibles, we’ll return to our original point about what makes an investment a high-return investment: A good deal. If you have a unique understanding of classic cars, action figures, or any other collectible item, you would be an excellent candidate for this type of investment.
Another reason to pursue this type of investment? For fun! If you have the capital to take a risk, it might be worth exploring something new. For instance, when I first started Tribevesting with my own Tribe, we took a chance and bought a racehorse.
We made the investment without a great deal of know-how about horse racing, understanding we would likely not see a big return on our investment. However, there’s no accounting for luck! Our investment ended up being a prize-winning racehorse, winning us returns, and giving our Tribe experience in a whole new type of investment.
Access High-Return Assets by Investing with Friends
If you’re looking for an investment opportunity with the potential to build wealth and give you financial freedom fast, the six ideas listed above are a great place to start. However, we know that higher return investments often come with a higher price tag upfront. If you want to invest in real estate but don’t have the capital to afford a down payment, you may think real estate investing is out of reach for you.
Fortunately, that’s not true!
One amazing tactic for buying your way into a pricier—and higher-return—class of investment is to invest as a group instead of going it alone. Tribevest is on a mission to make group investing as easy as possible. With our platform, you can pool capital with friends and family to access investment opportunities you might otherwise not be able to.
Explore the Tribevest’s Features and Pricing Today!
