The most important thing about investments isn’t what you might think: finding the perfect vehicle. Although this is how investments are positioned when introduced to the public, hyperbole is not your friend when choosing what to invest in. When you’re excited about an investment because its value has been exaggerated and overstated, you’re already in trouble.
Think of Warren Buffett. What makes him one of the best investors in the world? What makes Warren Buffett one of the richest men in the world–whose net worth is currently $76.9 billion–is the way he thinks about investments.
If you’re new to investing, then stick with the basics; get a feel for how the exciting world of investments works. Understand that it’s how you think about risk and reward, how you think about financial management, and how you think about due diligence that’s most important.
However, once you’re a seasoned investor, someone who has acquired knowledge, skill, and experience with investments, you might discover something interesting: It’s not always the hyped-up investments that make the most money, but sometimes it’s the unusual investments that offer the best returns.
Here are four atypical investments worth researching:
Cryptocurrency is a digital, decentralized, and encrypted currency. It’s analogous to cold hard cash, but for transactions over the Internet. There are two ways to make money with a cryptocurrency, the best known of which is Bitcoin.
First is simple income generation. Companies like Genesis Mining offer contracts which authorize a person to go out and find, or “mine,” bitcoin by verifying transactions using a computer or network of computers and earning, essentially, a commission. Someone provided a service and got paid for it.
The other way to earn traditional money is by owning, then selling, bitcoin. That is, investing. Let’s use a miner as an example. The miner sets up his computer, starts digging and earns some bitcoin. Now, he could use those bitcoin and take an e-shopping trip, or he can hold on to them. On the day the bitcoin are deposited into his account, they may have a hypothetical market value of $1,000 per bitcoin, but a few weeks later the market value increases to $1,500. At this point, the miner decides to sell his bitcoin to someone else who wants to make that online shopping trip.
2. Vintage Wines
The popularity of investing in vintage wines has declined over the past 3 years because they have a negative annualized return. Why would you want to invest in something that has a -9.6% annual return? Here’s the thing: not all vintage wines are underperformers. Chateau Pavie Wine has been delivering an exceptional annualized return. For instance, a 2004 bottle provided investors with a whopping 14.3% annual return. When investing in this fine wine from France’s Bordeaux region, you have to be careful about picking the best years. These have been 1998, 1999, 2001, and 2004 bottles.
3. Vintage cars
The sportier the car, the better the investment tends to be. “Classic cars,” reports CNBC, “are gaining attention due to their nearly 500 percent returns over the past decade, outpacing art and wine by more than 100 percent.” A 1967 Ferrari GTB NART Spyder has done exceptionally well. At a British auction, a Mercedes Benz once driven by Juan Manuel Fangio, the famous Formula One driver, was sold for $29.5 million. Meanwhile, a Ferrari fetched $27.5 million. When it comes to high-performance classic cars, the best returns are on Ferraris, and those that have shown the highest returns are from the 1950s and the 1960s, selling from $10 to $20 million.
It’s no secret that art has been a prized possession for hundreds of years. If you thought that investing in classic cars was a good return on investment, the amount of money earned in the art world is unbelievable. A 2015 Bloomberg article is a reminder about just how astonishing prices can be: “Since New York’s spring sales started last week, at least $2.1 billion of art has been sold at Christie’s and Sotheby’s, with the top 10 lots accounting for almost $800 million.”
In conclusion, once you develop maturity as an investor, it might be profitable to stray a little from the path traditional investments. No one would have imagined that an idea as unusual as cryptocurrency would go anywhere, but it now looks as if the blockchain sector will be one of history’s strongest bullmarkets.
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