Do your own thing

Investment Strategy

Asset Diversification

Cryptocurrency Education

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Published on

Feb 01, 2024

The longer you are involved in investing, especially in a large group, you will inevitably be asked a series of questions.  One of those common questions I am asked is, “What should I invest in?”

I have found myself providing an array of answers, but recently I have been finding new ways to help develop a better response.  My first answer is now, Invest in what you know.  If you know Commodities, invest in Commodities.  If you know Bitcoin, invest in bitcoin.  If you know the Ethereum ecosystem, then stick with that and slowly expand out to other chains.  When it comes to individual cryptocurrency products, I typically provide some resources and allow the individual to conduct their research, and then tell them to come back after studying the topics.  This makes it easier to have a conversation about the given assets.  But, not all investing is in cryptocurrency, and not everyone is interested in cryptocurrency.

Investing is a multifaceted endeavor that can take many forms, each with its own set of strategies, risk levels, and potential returns.  Each asset class also comes with its own market risk.  Here are some examples of different types of investments to consider:

  • Bonds: Investors can purchase government or corporate bonds, which are essentially loans to the issuer that pay back with interest over time. Bonds are generally considered safer than stocks but typically offer lower returns.

  • Mutual Funds: These funds pool money from many investors to buy a diversified portfolio of stocks, bonds, or other securities. Mutual funds offer diversification and professional management but come with management fees.

  • Exchange-Traded Funds (ETFs): Similar to mutual funds, ETFs are traded on stock exchanges and hold a diversified portfolio of assets. They often have lower fees than mutual funds and offer the flexibility of trading like individual stocks.

  • Real Estate: Investing in property can provide income through rent and potential appreciation in property value. Real estate can be a hedge against inflation but requires significant capital and can be illiquid.

  • Commodities: Investors can buy physical goods like gold, oil, or agricultural products. Commodities can be volatile and are often used as a hedge against inflation or for portfolio diversification.

  • Hedge Funds: These are pooled investment funds that employ different strategies to earn active returns for their investors. Hedge funds are typically only accessible to accredited investors and can be riskier and less regulated than mutual funds or ETFs.

  • Private Equity and Venture Capital: This involves investing in private companies, often startups, with the hope of significant returns when the company grows or goes public. Such investments are usually illiquid and carry high risk.

  • Retirement Accounts (401(k)s, IRAs): These tax-advantaged accounts are designed for long-term savings and can include a mix of stocks, bonds, and other investment vehicles.

  • Robo-Advisors: These online platforms use algorithms to manage an investor's portfolio based on their risk tolerance and goals. Robo-advisors are known for their low fees and automated investment strategies.

  • Certificates of Deposit (CDs): CDs are time-bound deposits held at banks that offer fixed interest rates. They are low-risk investments but offer lower returns and limited access to funds until maturity.

  • Savings Accounts: While not traditionally considered an investment, high-yield savings accounts offer a very low-risk way to earn a small return on your cash.

  • Peer-to-Peer (P2P) Lending: Investors can lend money directly to individuals or businesses through online platforms, earning interest as the loans are repaid.

  • Collectibles and Art: Investing in rare items like art, wine, or coins can be profitable but is highly speculative and requires expertise to avoid losses.

  • Cryptocurrencies: Digital or virtual currencies that use cryptography for security have become a new asset class. They are highly volatile and speculative but offer the potential for substantial returns.

  • Forex Trading: The foreign exchange market allows investors to trade currencies. It's a highly liquid market but can be very volatile and is often best suited for experienced traders.

  • Options and Derivatives: These financial instruments derive their value from an underlying asset and can be used for hedging or speculative purposes. They can be complex and carry a high level of risk.

  • Crowdfunding: This is a way to invest in projects or companies through small contributions from a large number of people, typically via online platforms.

  • Direct Business Investment: Investors can also choose to start or directly invest in a business. This can be highly rewarding but also carries significant risk and requires active involvement.

If you already have experience and interest in purchasing real estate, or have a background in construction, then maybe stick with real estate as your primary investment vehicle, and just experiment with cryptocurrency and the stock market.  Nobody said that you could only choose one type of investment, and nobody said that you are obligated to participate in any given market.  I encourage people to invest in what they know, and slowly expand their knowledge as they grow and learn in a given asset class. Where are you in your investment journey?  How would you classify your experience and your knowledge base?  Are you a journeymen long term investor into Bitcoin?  Or are you a masterclass degenerate trader of memecoins?  Or, are you a successful real estate investor who is learning the ropes about cryptocurrency and primarily invested in the top 10 cryptocurrencies for less risk? The best part about cryptocurrency is that there is room for everyone, beginner to masterclass, you just have to devote the time and attention to gain the knowledge required to participate and realize gains.