When it comes to investing, everyone wants maximum profitability. Commenting only to earn 1% to 2% of your money is less exciting than recovering 8%, 10%, or more. During periods of inflation, high returns become even more essential (since they will make that 1% to 2% net negative). The question, of course, is: which investments with high returns are the best? In my experience, after analyzing the data, there are five things that you should consider. It is worth giving the disclaimer here that past performance does not guarantee future performance. Any investment involves a risk of loss).
1. Real estate unions
Real estate syndications, a strategy in which several investors gather resources to buy a property, are one of the best ways to achieve high returns. Investors usually get between 8% and 10% a year, in addition to enjoying an appreciation as the value of the building increases (although the appreciation varies, it is not uncommon to see gains from 30% to 50%). Since the investment period is five years, these instruments have the potential to double your money or more: an investment of $100,000 can generate $50,000 over five years in rental income plus $50,000 in appreciation.
Pros: easy to start (totally passive), high return on investment, and you can choose your investments and projects.
Cons: generally, it requires an entry fee of at least $50,000, and investors must be accredited to participate in these private offers.
2. Rental real estate:
Another way in which investors can enter real estate and which also has substantial ROI potential is through rental properties. People usually buy single-family homes or condominiums and rent them; some will even rent rooms or flats in their main homes. The ROI depends largely on the market, but it is usually between 5% and 10% annually.
Pros: This method is a simple investment with high returns. You just need to choose the house, buy it, and start renting it.
Cons: You will manage tenants, coordinate repairs or maintenance, and collect rental income. You will also need at least a 20% down payment to get a mortgage, and if a tenant decides not to pay the rent, he will have to pay it. In addition, tenants can damage the property, leaving the owner with repair invoices that cut returns.
3. Real estate investment companies
Another excellent way to start investing in real estate is through REIT companies, which are listed on the main stock exchanges and usually have several real estate assets. They tend to pay reasonably good dividends, with returns that can increase by up to 5%.
Pros: REITs represent one of the easiest ways to start investing in real estate. You can even trade these shares from your 401(k). In addition, the dividend yield can be substantial.
Cons: These are stocks and, as such, are subject to the many whims of the market. Even if the dividend is solid, that does not mean the underlying shares’ price will be appreciated.
4. Cryptocurrencies
People seem to love or hate cryptocurrencies, with little emotional space in the middle. Those who believe in them have increased prices substantially, to the point that Bitcoin, at least at the time this May 2021 BuyShares article was published, had surpassed the leading indices by 70 times. And some still believe that cryptocurrencies have a long way to go, so there is still significant profit potential even though prices have risen substantially.
Pros: Bitcoin, Litecoin, Ethereum, and other currencies are easy to invest in thanks to large-scale trading sites. You can start with as much or as little as you want.
Cons: They are incredibly volatile; they could quickly lose 50% of their value in a month or increase by 50%. The profit potential is high, but so is the risk!
5. New companies
If you love taking risks with impressive views and new technologies, investing in new companies is risky but potentially profitable. There are many new ones that are trained every day to address some of the most serious challenges in the world, and most need funding and guidance to achieve success. If they work, these companies can result in substantial capital gains.
Pros: There is incredible bullish potential. One of the most successful stories is that of Peter Thiel, whose investment of $500,000 in Facebook in 2004 made him a billionaire in 2012.
Cons: substantial risk. Some companies can succeed, but most will fail or generate minimal profits. In addition, investors must be accredited.
Of these five, syndications represent the best combination of risk and reward: an opportunity to obtain high returns on rental income and appreciation without much of the risk associated with the other forms of investment. (Unlike cryptocurrencies, you probably don’t have to worry about your building being worth 50% less in a day!)
