Young people tend to have less spare money, which means their investments tend to be a little on the conservative side. A recent Guardian article discussed options for alternative investments that could be appropriate for people in their early 20′s who are willing to take on a little risk for some extra returns.
What’s really important to remember with investing is that there is no guarantee that there will be a return on the investment, and sometimes not even a recovery. It would be wise for any investor to be prepared for the worst.
Young people are familiar with crowd funding, and there are similar options in equity. This gathers up multiple smaller investments and turns it into a much larger one, opening up a variety of new options for people with less money to invest. Crowdcube, just one option, has only a $15 minimum. Because young investors will presumably have less money than the average person, it would be smart to make sure they only invest a small percentage of their liquid money into equity crowd funding. The Guardian offers a 5% maximum.
Another option are person-to-person lending, with companies like Lending Tree. Instead of putting money into a bank account, it goes into a protected account and lent to other people. There are risks of losing the money, but there are also significant gains to be made. Apparently no P2P platform have any worse than a 3% default rate, which is decent. Many companies have some kind of contingency money that can help recoup losses. These platforms offer much better returns than a standard savings account – up to 15%.
There has been a great deal of growth and increasing interest in groups like these, with lots of money being offered to startups. The space is still young and open to big players. There is a lot of potential. While a lot of the sites and platforms are very shiny and attractive, but young people still need to be informed and cautious about the industry.
from Mark Tuminello http://ift.tt/1wZGC5p – latest post by Mark Tuminello