Risk vs Reward of Buying Digital Assets on Flippa

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. Usually, this does not involve buying digital assets but as we continue to question the traditional methods of making money buying digital assets is becoming more of a popular path for entrepreneurs.

If you’re interested in having an average amount of “wealth,” and acquiring it through the safest, well trotted path, the majority of the time this means going to school, getting a well paying job, saving money, investing in stocks, investing in mutual funds, and retiring one day.

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.

Taking Risks

I have never met a truly wealthy person that reached their financial independence by not taking risks. 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 digital assets like eCommerce, 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.

Weigh the Costs and Benefits

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 digital asset on Flippa:

1. How long until I reach 50% return on my investment with this digital asset? How long till 100%?
2. If the digital asset fails immediately how quickly can my portfolio make up for the loss?
3. What are additional revenue streams I can add to de-risk this digital asset?

By answering those questions and a few others I’ve weighed the rough costs vs benefits of NOT buying quality digital assets 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.

Returns on Buying Digital Assets

To give a rough average of the returns that can come from buying digital assets, over the last 3 years, I’ve seen more than half of the digital assets 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 digital assets 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 digital assets 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 digital asset 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.