Fintech is transforming the financial industry. As digital platforms continue to evolve, new tools, solutions and products are being introduced almost on a daily basis.
The rise of tech start-ups has led to attractive investment opportunities. Some finch investments can be extremely lucrative.
However, like all types of investments, there is a risk. The main concerns are investment fraud, risk of systematic regulations limiting fintech operations, and money being obtained through deception such as the psychological manipulation of the elderly and less well-informed investors.
With fintech driving today’s investor market, trends are becoming increasingly popular as investors look for ways to make profits.
One of the easiest and safest ways of investing in fintech commodities is through an ETF – securities collected by a single entity and traded on regulated exchanges.
ETF’s offer a diverse range of investments within the fintech sector. Typical opportunities involve investments with insurance companies, fundraising and third-party lending.
One of the most exciting investment opportunities to emerge over the last decade is crowdfunding.
In simple terms, when you invest in a crowdfunding strategy, you agree to fund a business venture in return for a share of the profits.
The concept offers two solutions. It gives ambitious entrepreneurs the opportunity to build a business quickly and earn a living. Secondly, investors get to choose the business you want to invest in rather than the blind investments offered by traditional brokers.
Furthermore, crowdfunding strategies are managed by professional investors that have a reputation to uphold. Credible players assess applications for crowdfunding and make sure the start-up is legitimate and has sufficient potential to succeed.
The risk with this type of investment is the company may not be successful, profits are not guaranteed, and it could be hard to liquidate your shares when you want to sell.
The Bitcoin bubble in 2017 alerted the world to cryptocurrencies. Investors have already made millions from investing in digital tokens, but others have also lost their stake.
The major problem with this asset class is there are too many start-ups offering cryptocurrencies to choose from. Not all of them will be a success. What’s more, the crypto market is highly volatile.
Before investing in cryptocurrencies, it is prudent to find a company that provides real-world solutions. If you can do that, cryptocurrencies will be a very lucrative investment.
When investing in fintech, it is important to look at revenue growth rates, gross and operating margins and the company’s market cap. You should also consider whether the company is selling a product or service people need (rather than want) or whether they provide saleable solutions.