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Learn to Be Innovative with Your Money

Innovation with personal finances

For businesses, innovation helps a brand or products stand out, which in turn drives down competition and propels revenue. But thanks to evolving laws, a flood of new apps and a modern economy, innovation isn’t just for startups, Fortune 500 companies or the Steve Jobs of the world.

Being innovative with your money can give you an edge when considering alternative investment options—some of which involve more risk than a traditional savings account or 401k. Innovative personal investing isn’t for the faint of heart. You must be comfortable with new ideas and uncertainty. Afterall, no one said innovation—or investing for that matter—was easy. That’s what makes it compelling. If it was safe and predictable, everyone would be doing it.

Below are some innovative investment ideas to consider. As with any investment, use caution and your own judgment when deciding where to put your hard-earned dollars.

Investment crowdfunding

Investing in business startups used to be something reserved for the super wealthy, venture capitalists and professional investment institutions. However, thanks to new platforms and refreshed laws, investment crowdfunding has begun to create opportunities for people who want to get in the game of investing in new businesses without having to have huge amounts of capital.

In essence, a startup company asks a large number of “backers” to each invest a relatively small amount (as little as a few hundred dollars) in their business. Individual investors buy shares of a company directly. The backers hope to turn a profit when they sell their shares at a higher value after the company gets acquired by a larger company or “goes public.”

Micro-financing and micro-loans

Micro-financing, or micro-loans, is a financial service to loan small amounts of money to entrepreneurs who don’t have access to traditional sources of capital such as bank loans or investors. The idea is that a person can loan a relatively small amount of money (as low as a few thousand dollars), to another individual so they can start or grow a business. Once the business is profitable, the borrower pays back the loan—with interest—to the lender. Some micro-lending platforms have the added purpose of lifting people out of poverty or serving populations that would normally be unable to start a business.

Social trading

Social trading is a relatively new phenomenon where people use social trading platforms to observe the trading behavior of their peers and professional stock traders so they can mirror their investment strategies—with the goal of also mirroring their profits.

Before social trading, investors relied on technical analysis to form their investment decisions, which meant a person needed a substantial amount of expertise and time to become a professional trader. Social trading platforms claim to lower the bar for novice traders, allowing people to learn from seasoned investors quickly and efficiently.

Fortunately, if you don’t feel you are a natural visionary or creative, innovation is a mindset and a practice you can get better at. And there is practically an endless number of platforms and technology to help you. If you do your homework and invest wisely, being innovative with your money could help you uncover overlooked investment strategies, untapped resources and make you more money on your money.

DISCLAIMER: SafetyNet does not provide professional investment advice nor does it endorse any specific strategy or product or service listed on or linked to within this article.