Investing in NFT’s and New Investment Assets- AIE. In the current world of low interest rates and overinflated prices in traditional assets like property and shares. Many investors have shifted into new assets in order to make a return. With assets like NFT’s, Crypto Currency and Collectibles going bonkers. Here’s how you too can make some real dollars:
History tells us that there is always something new that comes into the investment space. Time and time again we have seen new financial assets be added. Into our markets only to become the norm sometime later. Host Andrew Baxter has seen products like Options. Collateralized Debt Obligations (CDO’s) and Contracts for Difference (CFD’s) enter the investment landscape in his 27+ years as a professional trader. Just to name a few. Some stick.
Some go and some even leave a trail of carnage behind them – notably the GFC caused by the CDO debacle. These names may seem fancy and rather daunting. However all in all these are merely new financial assets created in order to allow investors. To make a return on them either through capital gains (an appreciation in value) or through an income flow that the assets produce.
The crypto currency explosion
We couldn’t talk about ‘new’ financial assets without mentioning the talk of the town – crypto currency. Over the last 5 years. This is an asset that has not only exploded in value but also in popularity amidst traditional investors. As originally deemed as a shadowy, marginal, non-real asset to something that has become increasingly mainstream. Crypto currency is beginning to take over the financial market.
Evidence of this arose when we started seeing Super Funds (the Bastian of clean investing). Take large positions in Crypto currency. And big financial institutions pile into coins like Bitcoin, Ethereum and Ripple. With huge tailwinds created primarily from FOMO and the promotion via social media. Crypto currency has seen one of the largest value increases in history despite being an unregulated instrument that is extremely volatile.
Non-Fungible Tokens: NFT’s
Talking about the flavour of the month it’s only fair we spoke about NFT’s (pronounced “Nifties”). These are a pretty hard thing to get your head around however they are taking the world by storm. A NFT uses blockchain technology to essentially stamp an ‘owner’ or ‘creator’ of virtual artwork so that when it is traded in the future that owner will receive a clip on the proceeds.
This allows the investors to track the origin or genesis of a particular piece of artwork. Which may increase in value substantially based on scarcity and supply later down the track. For example, the creator and CEO of Twitter, Jack Dorsey, auctioned off the original copy (the NFT) of his first ever Tweet for roughly $2.2m USD. There are even gifs of Lebron James dunking in a Lakers Jersey being sold for hundreds of thousands of dollars. Crazy, right? Well NFT’s are here and they are gaining popularity fast as people continue to make real dollars trading them.
Classic cars and baseball cards
To move to something a little more traditional and robust. We can now talk of physical assets which a lot have people have made a lot of money on quite recently. Classic cars and baseball cards are the obvious choice. Not to mention other assets like fine Wine, Whiskey or physical artwork which have seen huge price increases in the last 5 years.
As ‘one offs’ in their particular field. The scarcity of supply and rarity of demand is what drives up their value as time goes on. Traders, of course, are capitalising on this as they buy. And sell these physical assets to make a quid outside of the usual stock market or property market.
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Before you invest, invest in yourself
These new financial assets may seem extremely attractive to the naked eye as investors share their success stories making some real dollars. That poses the million-dollar question, how do you make some money trading these assets? As host Andrew Baxter says, this is all about educating yourself as these new products certainly do carry a large element of risk.
Yes, you may unearth some treasure, however you may also unearth some trash along the way too. Luck always runs out whereas skills won’t – our advice is to get educated on investing in these assets before you drop your life savings on an NFT or crypto coin!