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Why do we need to do investment?
The reason to invest to something is to be rich or at least to prepare future uncertainty.
And there are many ways to invest my capital and time. But still it’s not easy to understand whole ecology or the structure of capital market. So I would like to look at popular investment market one by one roughly.
Personal Invest perspective (The purpose of Investment)
- Be richer than now
- Providing for the elderly
- Mixed: In general terms, richer than midddle class and also stable life for one’s old age
As a result everyone want to be rich and enjoy the previleges of a good life.
Personal Investment Market
I just describe 4 markets including 2 conventional markets of stock and real estate and business itself as investment purpose and then new investment market,cryptocurrency.
These 4 markets are should be considered seriously because those are approachable by individual, may have big impact in my life or new trend leading new economy trend.
1. Stock Market
It is very conventional market accepted as a one of major investment way.
We could invest a variety of stock markets. Most general ones seem to be local or US stock markets.
A. Advantage
- Reliability
The rule of market ecology and general market trend are already known. So the uncertainty of general stock market is lower than cryptocurrency or emerging high tech stocks. Investors could be protected under government policy and law - Liquidation
Easy to liquidate my asset
B. Disadvantage
- Low controllability and a lack of information
Even though the market could be protected by law, financial institutions and big investments control stock market. So each individual may be hard to earn profit from this market. Individual is also in the lack of information compared with professional investors. - Margin: Margin may be depending on personnel. But generally the margin is lower than rocket high cryptocurrency while having lower risk.
C. Products Trend
- As of 2020, high-tech related companies lead stock market increase. High-tech companies have shown positive outcome in terms of revenue and rocket-high profit. But still some very popular companies release very low or negative margin such as Tesla and Uber
- Recent market leading technology stock: Apple, Google, Tesla, Netflix, Amazon, Uber
- Other upcoming trends: Space development companies, Biomedical companies
2. Real Estate: House, Land, Building
It is most stable market. Even though the price of this asset get low, this asset would not disappear. There are many options we could choose such as land, house and office building. And the price is very different depending on what and where we buy.
A. Advantage
- Stability: It is very stable market. And it is possible to get high margin without high risk
- Controllability: The buyer could change the asset value providing individual effort to the real estate
- Profitability: The margin rate is so nice in urban region real estate market. In some metropolitan cities such as New York, Paris and Seoul, the price increase ratio of residential house has increased so fast 1.5~3 time for 2~3 years. But local area’s price level is very flat without any unexpected development or risk. In that case, my capital may be locked up for longer time than expectation
B. Disadvantage
- High capital requirement
The unit price is high. So it needs much capital to invest in real estate.
If individual investor do not have enough money, it would be hard to invest in. - Difficulty of liquidity
Real estate take more time and effort to liquidate it. If I need circulate my cash fast to invest in many different investment markets, this investment would be bad. - Tax
Whenever I trade this asset, I should pay tax. Acquisition tax, Property tax for house, Real estate sale tax. Especially, some countries try to increase these real estate relevant taxes to cut down house price that have increased rapidly for past years.
C. Trend
- Up to 2019, the price of real estate has increased a lot in many countries. From 2020, there are many signals that real estate price getting lower than before. Many countries start to regulate house price.
3. Buying and managing Business itself
This is a direct investment to business itself.
Buying and managing business could be a good way to earn money and make benefit by one’s own effort. This needs to have experience, knowledge and insight to market, customers, business ecology and huge effort and resource.
A. Advantage
Controllability & Dream come true
I could decide and control many things of my investment. This is a sort
of responsibility, but also great opportunity to be CEO. All details and
managing direction may on me.Potential highest benefit(or bankruptcy)
If I could manage the business successfully for several years, it may be possible to get much benefit. But the success if business is not easy story that everyone could have normally. High return with high risk that may take all my wealth or time in my life.Change life
Owning business may change your life and career.
This investment is not just financial investment. This could be life long investment. If I want to change my career and life, it would be an good option
B. Disadvantage
High risk
I may need many of my life to sacrifice my resource that may be money, time, friend or family. Investing my resource, I may take big fortune, but also take big risk.Require huge resource and no room to get other opportunity
It takes much time, money and other resource. So If I start to invest in and managing business itself, I would not have room to look around or invest on other attractive investment market.Many things to consider(Should be political)
Business is not just a matter of operating company. It includes all sort different fields such as sales, production, procurement, IT, process, Legal, Tax, Finance etc. In addition to that, CEO should manage all sort of political and social matters altogether. It may makes me tired and spend much resource for unproductive issues.
4. Cryptocurrency
This investment is something new. Every month, new cryptocurrency release in exchanges and many ones disappear failing to get attraction in crypto market. I cannot call it “fail”, but at least it was not succeed to survive looking for the new era of currency.
A. Advantage
High profit opportunity
The fluctuation of price is very frequent and big.
Still the practical end usage of Cryptocurrency is unclear while having high expectation of the future value. The investment to Cryptocurrency is still close to speculation. This is risk, but also big opportunity to get big money at a time. * Fast result
The crypto market is running 20 hours 365 days. And the market change is so faster than any other investment market ones. If I want to see the fast response to my investment shortly, this market would satisfy me.
But generally one of big thing to endure in investment is patience. Keep in mind “Be patient” and “Take a calm attitude”.Rapid development of relevant technology
The relevant technology is being developed rapidly. The most of the motivation of this development is money. The founding members who much portion are programer or engineer could get huge fortune at a time.Slowly getting involved into conventional currency market
On 2018, the cryptocurrency market exploded and then the price dropped drastically making so many investors lose their money mostly as over a half of their invested money.
This sort of situation had made many social and financial issues. But while passing by this time, cryptocurrency has approached to the area of practical currency silently and continuously.
The uncertainty is getting weaker and credibility of this new currency is getting stronger.
A. Disadvantage (Risk)
High Risk and Volatility
The risk is so high. Market is very volatile.
Most of cryptocurrencies are not verified as reliable currency yet in terms of technology, management team and philosophy and vision etc.
Many management teams of cryptocoins and founding members seems to be focusing on one-time big earning rather than building long-term reliable eqology.
Political interests is complex on cryptocurrency internationally and domestically. So each government hasn’t or couldn’t setup clear policy and law on this new currency trend.High portion of Swindler
This is also highly relevant to risk matter.
Many founder and founding members just wanna have big one-time lotto. They are saying that they believe cryptocurrency bight future and practical usage or others, but they do not care so much about 5 years later focusing on this moment value.A lack of business mind focusing on technical matter
I can see many news and white paper of cryptocurrencies. But it is hard to see very visible and practical plan to build up real actions that link cryptocurrency to conventional market and real life.
5. Other Investment Markets
A. Fund, Gold and Silver Market, Commodity Investment etc.