Pots of gold: best income-generating assets of 2019
One of the most common questions among the newly minted investors is how to invest money to get 50 to 100 per cent in profits by the end of the year. Banks are unable to provide such profitability.
Businesses may fail even without launching. And buying a posh apartment at the successful location and then renting it out will only pay off at best in about 15 years. We tend to believe that only financial pyramids offer high returns, but there are some types of asset that could guarantee 20 to 100 per cent annually in return. Let's figure out how to generate high income legally on the markets.
Risky assets are considered the most profitable in the financial world. They can bring both unlimited profit and loss. There are absolutely no guarantees that the trader will gain a particular amount of income or be able to recover the losses. Typically, the risky assets include stocks, commodities, such as oil, and cryptocurrencies.
There are also risk-free assets, such as government bonds. Their profitability is predetermined and guaranteed by the state. Default could be the only reason why the state would not be able to pay your interest. Having invested $100 in the US government bonds for just one year in 2019, you received 1.5 per cent. This type of investment could save you a little money; however, the income is unacceptable. The average inflation rate for 2019 in the United States was around 1.6 per cent. Therefore, you will receive $101.5 back, but it will be less valuable than the $100 you invested at the beginning of 2019.
In addition to that, there are so-called safe haven assets on the market that serve as a store of value. This is not to be confused with risk-free assets, as they do not provide complete safety. Neither do they guarantee profit in the future. The financial world considers gold, Swiss francs and Japanese yen to be the most popular safe haven assets, since major investors rely on them when the markets are shaky and uncertain. For instance, during the US elections or the current coronavirus outbreak they tend to partially transfer their capital to gold, yen or franc. They are the most stable assets in comparison to others. In moments of crises they can even rise in price, bringing profit to investors, while other assets become cheaper.
How was 2019?
2019 turned out to be very successful for risky assets, stock markets and cryptocurrencies, with all of them gaining in price. The trade war between the United States and China finally eased, and it caused the markets to kick off again after the stagnation. The cryptocurrency market has also recovered from the so-called Crypto Winter of 2018 and is steadily growing.
The growth of risky assets in 2019 was mainly caused by interest rate cuts announced by the US Federal Reserve. The key purpose of lowering such rates is to pour cheap money into the economy, with some of them flowing into risky assets. Investors take cheap loans and invest them in the risky assets that are currently seeing an upward trend. Even a 5 per cent return feels good enough to close a loan with a profit.
What is the main advantage of risky assets? The thing is that no investment fund or bank can guarantee a return. Moreover, even financial pyramids and fraudulent schemes are unable to do this. It is evident that one should carefully analyse the potential of a particular company to invest in it and get a profit.
Let's see which companies were the pots of gold in 2019 and brought over 100 per cent of income to their investors. Please note that our calculations refer to the period between January 1 to December 31, 2019.
The world's major cryptocurrency, Bitcoin (BTC) is in fifth place among the assets that generated income in 2019. It is worth noting that we are only discussing the full year’s results. Otherwise “digital gold” would have become a leader in terms of profitability. After the crisis the crypto markets had faced in 2018, the first half of 2019 was very successful. If you had bought some 0.028 BTC (equivalent to $100 on January 1, 2019), by the middle of the year your investment would have increased 2.88 times. The price of cryptocurrency rose to $13,880 by June 26. However, during the second half of the year Bitcoin was steadily declining. By December 18, it was down to $6,435, losing half of its value. By December 31, the price recovered slightly and rose to $7,300. Despite the drop in the second half of the year, you would still receive a total profit of 104 per cent, or $104 plus the $100 invested initially. Because of its enormous volatility Bitcoin is unlikely to get further than fifth place. However, in 2020, according to many analysts, the growth of Bitcoin and other cryptocurrencies will continue.
KLA, the US semiconductor and other related nanoelectronics producer, has beat Bitcoin in terms of profitability just by 1 per cent. The increase in its stock value came as a result of several major releases. KLA's quality products were in demand on the markets despite the abundance of competitors. Between 2016 and 2018, the company's annual revenue grew from $3bn to $4.55bn. Per the results of the third quarter of 2019, KLA's return on sales amounted to 25 per cent.
The company's financial performance has attracted investors who were happy to include KLA shares in their investment portfolios. Owing to the growing interest in 2019, the value of shares increased by 105 per cent from $87 to $178.
3. Lam Research
The third company in our rating, US-based Lam Research, is also manufacturing semiconductors and processing equipment. Many technology companies use its products to develop operational recorders, microprocessors and integrated circuits. Just as in the KLA's case, the main reason behind the stock surge was a good financial report that exceeded predictions made by investors and analysts. As a result, its average annual return grew by 120 per cent.
According to the Q2 2019 report, Lam's revenue grew by 2.4 per cent to $2.58bn, which was $70m higher than the analysts expected.
In 2020, the experts predict a 14 per cent increase in semiconductor sales that could drive the demand for KLA and Lam Research stocks.
AMD is one of the largest processors and video card manufacturers. During fiscal 2019 the company's stock has shown an extremely high yield of 155 per cent. The company's quarterly reports were, yet again, the main engine of growth. However, many traders attribute AMD's stock surge to the fact that this year 56 hedge funds have included the company in their portfolios right away. This might mean that the insiders have some additional information regarding AMD's prospects. The company is rumoured to cooperate with Apple in 2020. None of the details have been revealed so far.
The success of the Chinese online store VipShop was a surprise for many analysts and investors in 2019. Its results were beyond expectations. VipShop was only the fifth largest e-commerce company in China with a market share of solely 1.8 per cent, which is quite insignificant in comparison to Alibaba. The online store was expected to see a decrease in revenue and a gradual decline, but the total growth of VipShop stock in 2019 amounted to 180 per cent.
Vipshop annualised sales growth of 25 per cent. The number of active customers over the past year increased by 2 per cent to 56.6 million. The total volume of orders for the first quarter alone increased by 25 per cent to 90.2 million.
VipShop's own logistics network has been modernised and is now delivering about 99 per cent of its own orders compared to 93 per cent in 2018. Moreover, the company processed around 81 per cent of customer returns, compared to 67 per cent in 2018.
Let’s see how much you would have earned if you had invested only $100 in our top-5 stocks in the beginning of 2019.
The result is just stunning: $500 dollars invested in the beginning of 2019 would bring you $660 of net income. That would double your capital, even if we are taking into account the overall inflation rate and the commission taken by brokers or exchanges. In 2019 it did not take a genius to earn high profits. The high-tech sector, represented by the NASDAQ index, grew by 42 per cent last year, and the market capitalisation of the crypto markets grew by 55 per cent, from $122bn to $190bn, during the reported period. That said, if you had bought the NASDAQ index or several top cryptos, you could increase your returns by 40 to 50 per cent without involvement in fraudulent schemes such as financial pyramids.
How to invest in promising assets
One of the main reasons why people stay away from investing in stocks or other assets is because they simply don’t know how to do it properly. Most of us think that investments are only for professional traders. Just a decade ago that was almost true: in order to buy any promising asset one had to become a fully committed broker and study complex papers that required an appropriate education to be understood. But times have changed, and nowadays any internet user familiar with the basics of financial literacy is able to make investments without resorting to brokerage services. One can choose the asset – stock, currency, gold, oil or cryptocurrency – and buy them in tokenised form in just a few minutes.
The regulated tokenised securities platform Currency.com offers over 1,300 different assets to its customers. The list includes leading cryptocurrencies, tokenised shares of the world's largest corporations, stock indexes, ETFs, corporate bonds, commodities and fiat currencies.
To date Currency.com is the only platform that allows customers to invest traditional assets in crypto and vice versa. The platform is regulated by the the Belarus High Technologies Park in accordance with Decree No 8 “On the Development of the Digital Economy” signed by the country’s president Alexander Lukashenko. This level of regulation makes investments safe and legal even with cryptocurrencies.
The crypto markets have grown significantly within the past three years, turning from a web phenomenon into an entire industry that cannot be ignored. The world's largest corporations have paid attention to blockchain technology, with some of them trying to integrate cryptocurrencies into the existing payment system. The leading countries, such as China, the United Kingdom, Germany and others, are already developing their own state-controlled digital currencies. Because of the gradual transition from the traditional financial system to the digital one, the merger of the crypto industry with the modern financial world seems inevitable. That is why it is crucial to invest in both traditional and digital assets in order to generate income.