There are many ways to invest money. Letting your money work to end up with more than before is the secret of true wealth. There are countless ways to invest your money. In this article we present three risky investments. You can potentially generate high profits, but you also need good nerves. Because the risks are high and can sometimes result in high losses.
We recently reported on different types of investors. Some people like to risk more in order to have the chance of higher profits in the end. Others could not sleep well in such a situation. For the second, a portfolio is recommended that mostly contains conservative investments. Because such are usually not subject to strong price fluctuations, and are characterized by continuous, predictable returns.
In this post, however, we will introduce you to investments that are for people with more courage to take risks: High profits are sometimes possible in all three classes: stocks, options and cryptocurrencies. But this potential has its price. Such investments are heavily exposed to the laws of the markets and can sometimes lose value dramatically, so that in the worst case all the money invested may be lost. For this reason, one should invest in such investments with extreme caution and never more than one would be prepared to lose in the worst case.
In principle, even for people with a high level of risk awareness, the portfolio of investments in which you save your savings or parts of them should be invested in safe, conservative investments. But let’s take a closer look at the three risky investments presented:
Shares – profit from shares in companies
Everyone knows shares to a certain extent. These are actually shares in companies. The investor who holds the majority of all shares in a company basically controls these companies. Because listed companies basically have to act in the interests of their shareholders. And the good thing: You don’t have to be rich to buy stocks if you can get over it, just hold small shares and therefore have fewer voting rights. Equities have performed well over the decades. However, these securities are also subject to strong price fluctuations. When the economy is generally weak, stocks generally suffer the most.
What is particularly exciting about stocks of large, established companies in particular are two potential income opportunities. Because shares can become more expensive due to their price increase, which also makes own shares more expensive. The second source of income from stocks is dividends. These are company profits that are distributed to the shareholders. The best stocks with dividend payments enable additional income of up to 5% or more of the share value. But far from all public companies pay a dividend.
The risk to this risky investment lies in the uncertainty of the future price development, as well as in the possible total loss, which usually has to be dealt with in the event of a bankruptcy.
Options – securities for speculators
Warrants and other derivatives are generally considered to be very risky investments that can be traded on the international stock exchanges. These are securities that are basically pure bets on the future prices of an underlying. Anyone buying an option bets that the underlying will be higher or lower on the specific date than on the day the option is bought.
The crux of the matter: If you win the bet, you can sometimes make astronomical profits with relatively small stakes. However, if you are wrong and misjudge the future development, you will lose all amounts used.
For this reason, and due to the high complexity of these warrants, they are considered investments for absolute professionals. People who don’t understand much about stocks and the stock market should definitely stay away from this investment.
Cryptocurrencies – the future of money?
Bitcoin has been known to everyone since the big investment bubble in 2017 at the latest. At least when you’re dealing with money itself. The news was full of reports of people who made huge fortunes with cryptocurrencies in no time.
And indeed, for example, Bitcoin has experienced an incredible price increase, at least until autumn 2017. The first bitcoins were sold a good 10 years ago for a fraction of a US dollar. To peak at the end of 2017, a Bitcoin cost $ 20,000. But the brutality of the markets has not spared this young industry either. Again and again there were extreme price drops, for everyone who invested in this new and highly risky form of investment. The industry has still not recovered from the highs of the year before last.
Because cryptocurrency exchange rates fluctuate so much like no other investment ever, Bitcoin and other cryptos are still highly controversial. It is far from certain whether cryptocurrencies will still exist in 5 years.
Without a doubt, this investment is probably the most risky one you can currently make. But if you believe in the future of cryptocurrencies and have a lot of courage to take risks, a certain investment could well be considered. Because this sector is always innovative.
A risky investment sometimes promises high profits. But not for nothing – because the risks are also very high. For this reason, you should never put all your assets in a risky investment. Especially not in the most extreme of them: options and cryptocurrencies. In a balanced portfolio, these forms of investment can be justified, especially stocks that have been tried and tested for decades.