It’s only natural to want to make as much money as possible when you are investing. But, investments carry a certain amount of risk. The higher the risk of losing your investment, the higher the returns usually are. When you decide that you don’t have the stomach for too much risk, your returns are much lower.
Some people like this risk. It’s exciting to see the numbers rise every month and they don’t mind if there is a risk to losing it.
If you have some money that you want to play with and can afford to lose, then you may want to try some of these investment strategies that are high risk but can give you a high return.
1 – Crypto arbitrage
Lots of people are frightened off of trading cryptocurrency due to the volatility. But, others love this volatility as it usually means that it can spike high and not just crash out.
If you are somebody that thrives on fast paced investing and has an eye that can spot an opportunity when it presents itself then crypto arbitrage could be a good way forward for you.
The way that it works in essence is that there are different exchanges that offer slightly different valuation of a cryptocurrency like Bitcoin. Usually the variances are not that great but in big numbers can make a decent profit. So, you’ll buy some currency in one exchange and then quickly cash it out on another.
This is different from trading as you generally are buying the cryptocurrency at what you hope is the lowest value and then waiting for the overall value to increase. This can take days, weeks, months or even years. With arbitrage you are working in minutes.
2 – Venture capital funding
Everybody wants to be the first one involved in a new product or gadget that is going to change consumer behavior. A new software or product can be hugely profitable and pay off in incredible dividends when you invest in the startup.
However, there are a lot of big promises made and plenty of wishful thinking that a startup will end up a huge success. Many fail and if the one you decided to back is one of them then your money disappears.
It takes good vision and understanding of the market that your preferred startup operates within to understand what your actual chances of success are.
3 – IPOs
An IPO is an Initial Public Offering. It is when a business decides to go public and sell shares in their business. Now, this is less risky than being a venture capitalist, but it still carries quite a bit of risk.
Some companies issue their IPO too early and are really just trying to raise some capital to keep operating. This can mean slow growth or no growth at all for your initial investment. The point in taking the risk is to make a lot more than if you put your money into something safe like index funds.
