Investing pretty much always comes with some level of risk – but if you’re looking for higher returns, high-risk investments may be the best option.
But what are some of the best high-risk investments to invest in? That’s what we’ll be covering in this guide – some of the best high-risk investments include:
- Individual stocks
- Cryptocurrency
- Real estate
- Mutual funds & ETFs
- Art Investment (emerging artists)
Individual Stocks
Investing in individual stocks can come with its fair share of risks, but it can offer decent returns. Stock prices can be unpredictable, and certain factors can lead to significant losses. Some of these factors include:
- Economic downturns
- Industry changes
- Company-specific issues
However, if you research carefully and diversify your portfolio, you can work to mitigate some of these risks. That being said, it’s important to learn about the company, research market trends, and determine your financial goals before investing in individual stocks.
Cryptocurrency
Chances are, you’ve heard about cryptocurrency in recent years – more and more people have begun investing in crypto. Although it has the potential for sky-high returns, it’s one of the riskiest investment choices on the market. This is partly due to regulatory uncertainties, and partly due to the crypto market’s extreme volatility.
Some investors have seen unbelievable gains, whereas others have experienced significant losses. If you’re looking to invest in crypto, you’ll need a high tolerance for risk and a firm understanding of the market dynamics and technology used.
Real Estate
There are several avenues you can take to invest in real estate, such as:
- Rental properties
- House flipping
- Real-Estate Investment Trusts (REITs)
Ultimately, the real estate market can be a great way to generate long-term, high returns. However, the real estate market is prone to fluctuations, and you could also lose money through unforeseen expenses, market fluctuations and property depreciation.
So, before investing in real estate, be sure to research property values, rental demand, and local market conditions.
Mutual Funds & ETFs
Mutual funds and exchange-traded funds (ETFs) can be a great way to diversify your portfolio and spread risk across different assets. Although mutual funds and ETFs can give you access to a range of markets and sectors, they can be risky.
Some risks to be aware of include:
- Market fluctuations
- Fund management fees
- Economic downturns
These can all impact your potential returns. So, conduct thorough research on fund objectives, performance history, and expense ratios.
Art Investment – Emerging Artists
Finally, we have art investment. Not all art investments are high-risk – there are low-risk ways to invest in art, such as choosing to invest in blue-chip artists. These artists have a stable history on the art market and are a reliable choice. However, investing in blue-chip artists may not offer the same returns as investing in emerging artists.
Investing in emerging artists can be high-risk, high-reward. You can buy low and sell high – however, this all depends on whether the artist will rise in popularity or not.
When Banksy was just starting out, people would buy his artwork for hundreds of pounds (at best!). However, if investors held onto his artwork, they could be selling it now for millions.
Art investment requires a firm knowledge of the art market, as well as an eye for discovering promising artists and art trends. If you’re looking to invest in emerging artists, look no further than Grove Gallery. We have work available by new and emerging artists – you can invest with as little as £3,000.
If, however, you’re looking for a safer investment option, you can invest in established artists too with Grove Gallery, and generate returns of up to 12% per year.
Key Takeaways:
- Higher-risk investments offer the potential for impressive returns – but expect increased uncertainty and volatility.
- Some good high-risk investment options include individual stocks, cryptocurrency, real estate, mutual funds, and art (particularly by emerging artists)
- Always conduct thorough research before investing and understand the risks involved
- Be sure to diversify your portfolio to mitigate risk across different asset classes
- High-risk investments are better suited to experienced investors with long-term outlooks
High-Risk Investment FAQs
What makes an investment “high risk”?
High-risk investments typically involve a higher probability of losing money or experiencing significant fluctuations in value.
Factors such as volatility, uncertainty, and potential for loss determine what high-risk investments are.
Are bonds high-risk investments?
Bonds are generally considered lower-risk investments compared to stocks or cryptocurrencies. However, certain types of bonds, such as junk bonds or those with lower credit ratings, carry higher risk due to the increased likelihood of default.
Are stocks high-risk investments?
Investing in the stock market is considered riskier than bonds or other fixed-income securities due to their price volatility and exposure to market fluctuations. While stocks offer the potential for high returns, they also come with a higher risk of loss.
Why are collectables considered “high-risk”?
Collectables such as art, antiques, or rare coins are often considered high-risk investments due to their illiquidity, subjective value, and lack of income generation. The value of collectables can fluctuate significantly based on changing market trends and consumer demand.
Are any investments 100% safe?
No investment is entirely risk-free. Even seemingly safe options like savings accounts or government bonds carry some level of risk, such as inflation or interest rate fluctuations.
However, some investments, such as those covered by the Financial Services Compensation Scheme (FSCS), offer a degree of protection against loss.
