Buzz
Invest your money wisely, and your overall risk should remain fairly low. However, there are times when taking on more risk might be worth it. For instance, you might want to diversify your portfolio. No matter your reason, it's crucial to keep these factors in mind before making a decision.
On The Simple Dollar, Trent Hamm specifically addresses investing in collectibles. Collectibles can be a risky investment due to the unpredictable nature of their market value.
However, there are legitimate reasons why people choose to invest in items like beanie babies, baseball cards, or gold coins. For some, collecting is a passion. Additionally, the potential returns from these investments can be very appealing.
Before jumping into any risky investment, it's important to weigh several key factors. Hamm provides some solid advice to guide your decision-making process:
Never invest money that you're not willing to lose entirely.
If losing the money you invested would cause any financial strain, avoid making that investment. This should be money that, if lost completely, wouldn't disrupt your life...
Limit your risky investments to no more than 10% of your total investment funds.
This way, if a total loss occurs, your overall investment portfolio will only be impacted by 10% at most.
Never, ever consider risky investments if your plan is simply to buy and hold.
This strategy works best if you're actively buying and selling, taking advantage of market fluctuations. For instance, if a baseball player passes away or is inducted into the Hall of Fame, it's the right time to sell their card... If economic indicators point to an upcoming inflation surge, buying gold might be the move.
As with any investment, take time to think it through. Consider the decision from multiple perspectives, and then do what feels right for you. Hamm shares additional advice through the link below.
Photo by rafael-castillo.
