Since I've started in getting my first masternode coin, SPD and have it invested into the shared masternode platform, SimplePOSpool, this had been one of the main means for me to grow my cryptocurrency portfolio effectively.
No doubt the prospective of investing into masternode coins are very attractive, where the coinholders would see their coin balances grow over the period and at faster rate than staking them. However these coins share some shortcomings that should not be overlooked, especially those that promoted as high ROI once they are introduced to the public.
The first and biggest point to take note is: you are NOT the only one aiming to get quick gain from the high ROI coins. As good as it sounds, the underlying profitability still work quite the same with the POW (proof of work) coins - the more people owning the coins and setting up masternodes, the more diluted the return going to be, resulting in drop of the ROI%. The return from the coins would gradually getting far fewer in between to reach your wallet as the masternodes started to increase significantly, and they need to distribute the returns to more and more masternode owners in the network.
And secondly, you are also NOT the only one want to cash out the profit as soon as possible. Another very important equation that need to bring into the profitability calculation would be the price movements. I've seen too many masternode coins fall into this pattern, which dangerously similar to ICO coin - huge amount of investors would buy in the coins, or even directly the masternodes itself during the initial stage, and only to find out a lot of others (unfortunately many could be from the developer teams themselves) dumping the coins as soon as they earned their 100% returns. The price would undoubtedly fall to very low level that left many masternodes owners struggle to earn their returns with penny's worth of coins.
If these 2 points had gotten your attention till here. Let's see how you can do your best to avoid being locked into masternodes with coins that are potentially worthless in future:
DYOR (Do Your Own Research) - this golden rule never grow old. But where to check them? The starting point can be as simple as from where they started their announcement, usually from https://bitcointalk.org, and see how's the coin being perceived from the thread - is it being actively discussed? Is the thread being filled only by "promotional" one liners? I could have write another article that just focusing on this!
Does the coin has its clear and practical application or sustainability? This can be arguably the MOST important point to consider if you want to see the coin value grow in upward trend while you're setting them up as your masternode. You should not just own the coins and pray that more buyers would join in and pump up the price from thereon. The coins would need to have its specific purpose being served to push the demand beyond the simple "buy-sell" scenario. The coin roadmap and developer team level of involvement would be very helpful indicator on how well the coin being steered to its intended purpose.
Hint: common words such as "decentralised wealth distribution" could be first indicator that the coin do NOT have a clear purpose, and developers probably just created them for their own quick profit gain.
Hope this help, and feel free to share what are the "good" masternode coins that you're looking in that also serve good purpose in the comments below.