RelayRides blogger Eric Rosenberg discusses which assets are worth the investment and deliver the highest returns.
When most astute investors think about places to grow their money, they think of traditional investment ideas. Real estate and the stock market are common on the list, but there may be some assets with returns that surprise you.
Most of the self-made millionaires I have met did so through real estate investing. Investments in residential property have done well over the last couple of decades, minus a hiccup about seven years ago, and continue to generate incomes and property value increases for owners.
In the old world, we only had two good ways to make money with real estate. First, you could buy low and sell high. I bought a condo for $135,000, lived in it for a while, and now have it listed at $215,000. That is a great return on the down payment I made! The second method that has traditionally been used to make money with real estate is rental income. If your monthly ownership cost is $1,000 and you can rent it out for $1,500, you are making a great ROI.
Today, however, a third method has emerged. Short term rentals are growing in popularity thanks to the new sharing economy. You can rent out your home using sites like Airbnb. Competitor VRBO has some homeowners making more than $60,000 per year renting their home to vacationers.
Picking individual stocks is difficult for even the most skilled investors, but turning a profit in the stock market is easy over the long run. Famed investor Warren Buffett, one of the most successful investors in history, suggests new investors put their money into a very simple investment mix:
“Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.” – Warren Buffett
That’s right. The greatest investor of our time suggested that the average investor puts 90% of their long-term, investable assets into an S&P 500 index fund. He suggests that for good reasons. Since its inception, the median return was 15.79% including dividends. The 25 year annualized return is 12.89%. That is a great ROI.
In the days that European powers were colonizing the world, the quest for gold was a priority for all explorers. With such a long history of value, many investors say gold is a great place to invest.
Looking at the numbers, 20 years ago in the mid ‘90s, gold sold for about $400 an ounce. Jump forward to 2011 and that same ounce of gold was worth $1,900 per ounce. That is a 375% ROI!
But in the last three years, gold has proven to be more volatile than many investors expected. The price has taken big swings and now goes for $1,200 an ounce, a loss over the last three years.
What? Cars? No. Cars are a depreciating asset. Their value only goes down from the moment you drive off the lot. But just as with real estate, the times have changed and cars are starting to earn back their value.
Renting your car on in the sharing economy can turn that depreciating asset into a valuable, new asset class: rentable assets.
Top earning members bring in more than $1,000 per month renting their cars. If you could make $12,000 per year, how long until that car turns profitable. Two years, three?
List Your Car With RelayRides Today
Stop letting your car drain you and turn it into an asset with a positive ROI. List your car and start making money with RelayRides today.