When the average person thinks about building wealth they often follow what they’re taught in school and what their peers or family are doing with finances.
The majority of the time that means go to school, get a well paying job, save money, invest in stocks, invest in mutual funds, and retire one day.
This is a very well trotted path and if you’re interested in having an average amount of “wealth,” that is the safest path ahead.
However, if you want to build substantial amounts of wealth giving you and your family financial freedom, you will need to move off of the beaten path.
You will need to get comfortable with higher levels of risk, begin to understand the importance of cash flow, and do what you can to cover your expense with income generating assets.
I have never met a truly wealthy person that reached their financial independence by not taking risks.
All that being said, taking calculated risks are a healthy middle ground for smart investors looking for alternative asset classes.
Accumulating as much data as possible to support your investment into a newer asset class is the strongest approach to measure your risk.
With web properties like e-commerce, content sites, mobile apps, domains, SaaS businesses, and many others available on the Flippa marketplace now being considered a bona fide asset class for buyers and investors available data is in abundance.
This makes calculated risks easier.
Before I allocate any capital to a new asset, I always weigh the costs and benefits for both long-term and short-term allocation. These are the first three (of many) questions I ask myself before finalizing a deal for a web property on Flippa:
- How long until I reach 50% return on my investment with this web property? How long till 100%?
- If the web property fails immediately how quickly can my portfolio make up for the loss?
- What are additional revenue streams I can add to de-risk this web property?
By answering those questions and a few others I’ve weighed the rough costs vs benefits of NOT buying a quality web property at a fair monthly multiple of revenue. Asking basic questions like those builds confidence, helps with your mindset, and significantly de-risks the investment overall.
The majority of the time while doing my due diligence, I operate in worst case scenario. Dozens of other buyers and seasoned investors I’ve met over the years in this space do the same.
To give a rough average of the returns that can come from acquiring web properties, over the last 3 years, I’ve seen more than half of the web properties in portfolio yield a 100% return on investment (ROI) within 12 months of buying them, after expenses.
That level of return on investment is only available through taking risks on a newer asset class that other investors aren’t as familiar or comfortable with.
This would be considered investing off the beaten path.
Following what everyone else is doing will give you the returns everyone else is getting.
Taking calculated risks on web properties on Flippa using large amounts of public data has proven time and time again to outperform the majority of assets I’ve ever owned.
Investors I know and respect all take risks on alternative asset classes multiple times per year to test the waters with higher returns.
Fortunately, it’s still extremely early in the landscape of buying web properties and with Flippa you have the ability to freely communicate with sellers directly.
If you are searching for a way to change the trajectory of your life and accumulate true wealth, take a risk on by acquiring a small web property on Flippa to test the waters.
Spread your allocation out across multiple niches and business types, and make sure you’re collecting as much data as possible to de-risk your investment.
Also, be sure to have fun with the process.
Author bio: Steve McGarry
Steve is host of The Sound Money Podcast and spends most of my days talking about blockchain startups, dApps, coffee, and influencer marketing.