If you are new to the world of investing, don’t be intimidated by the financial jargon that tends to scare intelligent, well-to-do people away. You don’t need to be an aggressive vulture fund owner to profit from this game of risk. If you’re looking to build long-term wealth, investing is becoming more diversified and more user-friendly than ever thanks to our good friend, the internet.
Know what type of investor you are.
If you want to retire well enough without having to check the Dow and the NYSE daily, put your money in a mutual fund and let it grow slowly and steadily. Although there are mutual funds with no minimums, most require a minimum investment between $500 to $5,000. The average annual return on investments in mutual funds in 2019 was 6-7%, which is good to know when comparing to higher-risk investments and deciding what type of investor you’d like to be.
It takes money to make money, as they say. If you haven’t had an annual income over $200k for the past two years, set your sights on amassing a net worth great enough to become accredited. An accredited investor can invest money directly into the lucrative world of private equity, which includes hedge funds and venture capital. On the opposite end of the investment spectrum from putting money in a mutual fund, a hedge fund requires a minimum of $100k to $1million or more. If you’re serious about investing, become accredited. You don’t need millions to have the freedom to invest in companies and projects you believe in, but keep in mind that you do need to risk more to gain more.
Use fintech to your advantage.
Boomers don’t have the technological savvy that millennials do. Where you once could only find a new investment opportunity through the public stock market, you now can use online alternative investment platforms for your acquisitions. Commercial loans found through this type of lending platform are often backed by collateral, so your debt investments have greater security. These alternative investments include short-term loans (for real estate or litigation finance, for example) that traditionally would have gone to well-connected investors. In 2020, you have more access than ever to the world of commercial finance with more guarantee that you’ll get a return on your principal investment.
As an accredited investor, you can use a platform such as Yieldstreet to analyze the prospectuses of various loans and choose what you deem the lowest-risk investment. From there, you can keep cash in your Yieldstreet Wallet and easily invest in the pursuits of your choosing. While it’s best not to downplay Yieldstreet complaints such as higher management fees, it’s downright impossible to ignore the interest payments you’ll receive on the cash in your account. It’s like an online bank account. It’s even backed by the bank Evolve & Trust, which in turn is backed by the FDIC. Investors earn 2% on the cash in their account in addition to the returns they receive on investments, which the company projects are on track for a 12.6% annual return.
Know your rights.
Not every deal you broker will turn out the way you expected, so litigation is necessary from time to time. The faster you can get repaid, the faster you can begin producing a positive revenue stream again. As a lender, you have the right to seize any collateral the borrower has put up in the case that they cannot make payments on their loans. Budget your collections litigation on a flat fee through a company like Global Legal Law Firm. Law firms enjoy certain exemptions related to collection activities; therefore, they can pursue your debt more aggressively than typical collection companies.
Building long-term wealth takes time. Have patience, grasshopper. Invest wisely.
