My blog focuses on Financial Literacy/Money. A key to winning with money is learning how to invest it effectively. As with every area, there are both old and new ideas. The following contributed post is entitled, Traditional vs Modern Investing: 5 Old and 5 New Investment Ideas.
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Investing money is something people have done for centuries. But while some types of investment have a long history, others are still fairly new concepts. Traditional investments typically offer more stability but a gradual return. Modern investments can be more risky – many investors are still figuring them out – but can potentially result in faster and higher returns. This post compares five traditional investment methods with five modern investment methods.
Five traditional investments to consider
Real estate
Property investing has a long history and is often seen as one of the most reliable ways to make a return. You can make money from real estate either by renting it out to tenants or by ‘flipping’ it (making improvements to boost its value and then selling it). Real estate includes land, residential buildings and commercial buildings.
Forex
Forex trading involves making money by buying foreign currencies that are increasing in value. These currencies are then converted back for a profit. The industry as we know it today didn’t get started until the 70s, however there are records of people buying foreign currencies as a form of investment from centuries ago.
Collectibles
Collectibles are items that have become increasingly valuable due to their rarity and demand. They include books, sports memorabilia, vinyl, old coins, stamps, wine, art, classic cars and antiques. Investing in collectibles can be a hobby as well as a form of investment.
Precious metals
Precious metals like gold and silver have long been sought out for their value. The likes of gold is particularly popular as a hedge investment as it typically gains value during recessions when other investments lose value. Precious metals can be bought in the form of bullions, coins, jewelry or antiques.
Traditional stocks
The first stock exchange, the Amsterdam stock exchange, was established in 1602. Since then many stock markets have emerged around the world, allowing people to invest in shares of successful companies. While there is always some risk when investing in stocks, you are generally guaranteed to make a return if you invest in long-running successful companies that have been around for decades. This includes the likes of Walmart, Coca-Cola and Berkshire Hathaway.
Five modern investments to consider
Domain names
Domain names are pretty much the internet’s equivalent of real estate. It’s possible to make money by buying website addresses that are likely to be sought after in the future. This domain name guide explains more about this relatively new form of investing.
Cryptocurrencies
Cryptocurrencies are digital currencies that were designed as a decentralised form of finance for getting around foreign currency transfer fees. The first cryptocurrency, Bitcoin, was launched in 2009. Since then, Bitcoin has risen dramatically in value, making it a popular investment asset. Some cryptocurrencies have proven to be very volatile, which has put off some investors.
NFTs
NFTs are best described as digital collectibles. They are receipts of ownership for sought after digital files (such as original copies of memes, digital images and songs) that are bought using cryptocurrency. This is still a very new form of investment with an unpredictable future.
Peer-to-peer lending
Peer-to-peer lending involves lending money to other people via online platforms and making money through interest. It essentially allows everyday people to become lenders. A lot of people have made huge amounts of money via peer-to-peer lending, but you do need to keep on top of repayments.
Tech stocks
Tech stocks are typically stocks belonging to relatively new tech companies like Tesla, Nvidia and Palantir. Some of these tech companies have seen huge growth in recent years with investors doubling and tripling their funds. However, tech stocks have proved to be very volatile making them a potentially risky investment.
Traditional or modern?
Most traditional and modern investments can have their benefits. Traditional investments are typically a better option for those looking for a low-risk solution or those who are technophobes. Modern investments are better suited to those who are tech-savvy and eager to make a lot of money fast. A mixture of both can help to offer a balance of high-growth and low-risk investments.
