Some pros and cons of looking at various investment classes
In spite of the economy in 2020, there is still potential for you to make a million dollars in the next five years. There is some risk associated with my preference. I am not recommending any options that I have not used in the past 25 years of investing.
I have explored and tried many different ways to invest, some were successful and some have failed. While in school, I did not go to learn investing or take any financial classes other than a semester of macroeconomics. From that class, I barely remember anything other than supply and demand.
With a lot of self-study, reading hundreds of financial books, magazines, and watching countless hours of video, I have finally found the holy grail to invest. I have spent over 20 years investing in the stock market and 15 years in real estate. After investing in silver for the last decade, these are all potential candidates. Previously, I had some savings bonds that I received as a teenager and sold those after 10 to 15 years.
Through trial and error and experimenting with penny stocks that turned out to be an expensive short-lived event, I found that wasn’t the area for me to make my millions. The market for flipping houses is interesting, but you need a good system as well as funds to get that going. In spite of many books talking about making millions of dollars, few really back up their information.
With any investment, there is some risk. There is nothing that says an investment will give you a guaranteed return. With my thoughts I’ll outline, I give the same disclaimer.
Everyone has the power to follow the stock market. If you made it through fifth grade math, you can do it.
Finding the next Apple or Tesla stock is hard to do. There are many stocks that could see great returns like these investments but your guess is as good as anyone else today. You can easily find that hidden gem but you will most likely have to wait for years before you see a tenbagger.
A tenbagger is former Fidelity manager Peter Lynch’s term for an investment that returns 10 times its initial purchase price.
Chasing penny stocks could see a return of 10 or 20 times your investment, but getting in and out at the right time is key and very easy to miss. Investing in similar Tesla-like stocks such as Nikola Motors (NKLA), Workhorse Group (WKHS), or NIO (NIO) are all possible but not guaranteed.
Could a medical company that produces the coronavirus vaccine be the next big winner? It’s unlikely. Medical companies do well and they may see a short spike in price if a vaccine is created, before falling back to reality.
There are many possibilities and many failures lurking in the stock market. It is also a big risk trying to identify that one stock that could turn you a millionaire in a few years. It is always best to diversify your eggs in different stocks (or an ETF/mutual fund) and not have all your money on that one stock.
The stock market doesn’t pass the test to have a million in assets in the next five years.
Don’t wait to buy real estate, buy real estate and wait.
T. Harv Ecker
Investing in real estate is another safe option, but you would need a lot of money to get started. It’s hard to jump into a space and have the capital to buy your real estate investment. With today’s market, there is some risk, and you have to hope your tenant doesn’t lose their income, which in turn is your rent.
With real estate, you most likely won’t have a million dollars in equity from owning the property. In most cases, you have to put money down and then get a mortgage to buy real estate. So you may put down 20% to 30% to own your million in real estate, which is possible. Then you still owe debt on the property that you’ll pay over the years, depending on the terms of your loan.
This does not take into account the appreciation of real estate. In some areas, real estate appreciates faster than others. For instance, Boise, Idaho, had a 10% appreciation in the past year, while Hartford, Connecticut, had a 1% appreciation rate. Location is a big factor in price appreciation.
Real estate doesn’t make the list to have a million invested in the next five years without putting a lot of money down.
Although gold and silver are not by nature money, money is by nature gold and silver.
The precious metals market is seeing a good return this year. Silver is up 60% in six months, while gold is up 12% this year. Over the long term, the return for these investments is not great.
Gold is at $1923 today. One website predicts gold could reach between $3000 to $8000 over the next five years. If you invested in gold today, you would need to invest at least $240,375 and hope gold reaches the high end of this prediction. On the low end of the prediction, you would need to invest $640,359.
Silver is $25.32 today. Two analysts predict silver could reach between $86 and $130 over the next five years. If you invested in silver today, you would need to invest at least $190,769 and hope silver reaches the high end of $130 prediction. On the low end of the prediction, you would need to invest $290,697. In either case, there is a lot of speculation since silver and gold have never reached these prices before.
These precious metals won’t lead you to millionaire status unless you invest a lot of money to see a 10-fold return.
I have invested in Bitcoin because I believe in its potential, the capacity to transform global payments is very exciting.
Finally, we’ll get to my final pick on what could lead you to a million dollars in five years. You may have read my previous articles on cryptocurrencies and you know this is my favorite topic to discuss when it comes to investing. If you are unfamiliar with Bitcoin and cryptocurrencies, I encourage you to get a quick refresher here.
Though this is my choice to lead you to a million dollars in five years, this also has the most risk of all of the investments. There isn’t anything risky about investing in cryptocurrencies, but it is easy to make a mistake and lose what you have invested. The cryptocurrency market has some scammers who want to take your money and run.
There are over 7378 cryptocurrencies as of today according to CoinMarketCap. You can think of the number of cryptocurrencies as the number of stocks. There are good stocks and then there are bad stocks. The same holds true for cryptocurrencies.
Some like to think investing in Bitcoin is the way to go while others have their favorite alternative currency (altcoins) that they like to invest in. I own Bitcoin as well as some cryptocurrencies but lean heavily on investing in altcoins to reach a million dollars.
Some analysts and investors predict Bitcoin will reach $100,000 or more in the next two to 10 years. Bitcoin reached a high of $20,089 in December 2017. If today’s price of Bitcoin is $11,576, reaching $100,000 is possible. To reach a million dollars, you would need to invest at least $100,000.
Using the same reasoning for altcoins, I think you could reach a million dollars but investing less than you would compare to Bitcoin. I’ll use the IOST altcoin as an example.
If IOST reached its high of $0.13 as it did in January 2018, you would only need 8,000,000 IOST. IOST is currently sitting at $.005 as of today, or less than one penny. If you take 8,000,000 and multiply that by today’s price, you would need to invest $5,200.
In cryptocurrencies, it is expected the price will surpass the previous high. Cryptocurrencies have a limited amount of each that are produced. So there is a finite amount of these cryptocurrencies that will ever be produced. As for the dollar, the government can print as many dollars as they would like which devalues the currency.
With any investment in cryptocurrency, it is good to pick a few different cryptocurrencies. You never know when one of these cryptocurrencies may go bankrupt or get removed from an exchange which has happened before. Then you never know which will one will be a tenbagger.
What investment do you think could reach a million in five years?
Disclaimer: The writer owns real estate, stocks, silver, gold, Bitcoin, IOST, and other cryptocurrencies.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.