You know that investing is important and understand the benefits you can get from investing. At the same time, the world of financial markets may feel far away from your daily reality, and let’s face it - reading annual reports or looking at numbers and charts isn’t the most exciting thing in the world for most people. However, Investing doesn’t need to be boring! There are plenty of ways to combine what you’re interested in with making sound investments. In this post, we’ll cover several strategies for combining passion and purpose with investment.
Before we start, we want to highlight that there are a couple of ways to start investing in the stock market without having to spend hours educating yourself or doing research. Being short on time should never be a reason to delay getting started with investing. Some methods to get started with little effort would be using a Robo-advisor or investing money into index funds, which allow you to automatically spread your money over a number of investments.
However, if you want to take a more active role in your investment decisions and discover new and exciting ways to invest, read on to find out more.
1) Invest in Startups
Investing via crowdfunding platforms like Crowdcube and Seedrs means that you can support new businesses that align with your values. Many campaigns on the platforms have been centered around businesses that place a strong focus on sustainability or making a positive impact on society. Think of companies like Brewdog, which is now carbon negative.
Besides being able to support businesses whose mission you care about, the financial rewards from startup investing can be extremely high. For instance, early crowdfunding investors in Monzo have seen a 15x return and Freetrade investors have seen a 47x return.
That being said, the earlier the business is in its lifecycle, the higher the chance the business will fail. If that happens you will lose all the money you put into the investment. Likewise, in most cases, it will take a number of years until you will be able to sell your investment. This lack of liquidity means you need a long-term time horizon. Therefore, startup investing is considered a “high risk / high reward” type of investment and typically you’d do this alongside other types of investments to make sure you create a diversified investment portfolio.
2) Invest in thematic funds
If you don’t have much time, a good way to make investments that align with your values is to invest in funds. There are thematic funds that invest in a range of companies with a specific focus. For example, there are funds that focus on sustainability, technology, education or women-owned businesses.
There are various ways to get access to these funds, depending on what type of fund it is. If it is an exchange-traded fund (ETF) you can buy these from stock trading apps, such as Freetrade or Revolut. You can find a list of thematic ETFs here.
If you find the prospect of having to choose from a long list of funds daunting, specialized impact-focused investment apps such as Clim8 or Tickr, and more generic apps like Plum do the work for you. They create a portfolio for you based on your risk profile and personal values or present you with only a small list of thematic funds to choose from.
3) Invest in Creators
What better way to combine passion and investing, than supporting creators? Besides simply buying an artist’s work from their gallery or online store, new ways have emerged that allow you to combine supporting a creator with generating investment returns.
To start with, let’s take a look at music. There are several platforms that let you invest in music royalties. As you may know, whenever an artist’s song gets streamed online or played on the radio, the artist is entitled to a small sum of money (royalties). Artists can choose to sell these rights and are now starting to do so to the public. You can generate a passive income stream, while providing the artist with some instant cash they can use to fund new projects.
Digital Art & NFTs
Another way of investing in creators would be to buy digital art, in the form of the recently much-talked-about non-fungible tokens (NFTs). In short, NFTs are unique digital tokens that typically represent ownership in a digital collectible good, such as a digital work of art. You can buy NFTs from marketplaces like Rarible and Opensea. Some NFTs have gone up in value rapidly, but do keep in mind stories like the US$69 million sale of a digital artwork are anomalies and there is no guarantee that you’ll be able to sell your digital artwork on for a higher price or find a buyer at all.
4) Invest in Collectibles
One more way to make money via your passion is by investing in collectibles. Think of sneakers, luxury watches, handbags or fine wine. There are various ways in which you can make money with these items.
Trading On Your Own
If you’re looking to take a more active role, you can source your own collectible goods via marketplaces like Chrono24 for watches and StockX for sneakers. It’s not quite as involved as running your own e-commerce store, as items are expensive and you’d probably only buy one or a handful of items, but what is similar is that you’d buy these items with the goal of selling it on at a later time for a higher price. Most people who get involved in this type of trading have a deep interest in whatever they are trading as it requires time and effort to keep up-to-date with what’s going on in the market and you need to keep a close eye on when to score an item for a good price.
Funds & Managed Portfolios
If you have some level of interest in collectibles but don’t feel quite ready to become a trader there are other ways to get started. One option is to work with specialized funds or management companies that buy items on your behalf. There are several such companies in for example the wine and watches space. The main downside is that these companies typically only deal with very wealthy investors and ask for minimum investments that can range from a few thousand to hundreds of thousands of pounds.
If you want to start investing in collectibles, but don’t have £100,000 to spare on a managed portfolio or a luxury watch, a platform like Koia may just be what you’re looking for. Koia allows you to buy fractions of an item. This means you can buy and own, say, 1% of a case of fine wine or luxury watch. The advantage is that you can get started with small amounts, and still benefit from any price increase of the item, as well as benefit from other unique benefits of investing in collectibles. When it comes to collectibles, you’d also have to consider things like insurance and storage, which is taken care of when using platforms like Koia.
There are plenty of opportunities to align your passion and personal values with your investment decision. Whether it be via investing in startups whose mission you stand behind, investing in specific thematic funds, supporting creators, or investing in collectibles that you’re passionate about. The days where investing was nothing more than spreadsheets and felt anonymous are officially over, and we’re entering a new era where investors are able to combine passion, purpose, and profit.
This guest post was written by Iris ten Teije, co-founder of Koia.
Koia is on a mission to democratise access to alternative assets and let anyone invest in what they know and love. Koia fractionalises ownership in collectibles such as fine wine, classic cars and luxury handbags. Koia’s experts make sure to source and buy the best assets, and Koia takes care of authentication, storage and insurance. All of the benefits, with none of the hassle.
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