Investments span a spectrum from easy & passive consumption to difficult & active production. On one end of the spectrum is production, where you are creating investments into which others can invest. The other end of the spectrum is consumption, where you are buying into someone else’s investment with little or no knowledge or effort. In between these two extremes is varying degrees of active investing.
Guess which investments pays you the best? The ones where you actively created an investment -or- the one where there are layers upon layers of companies and people in between you and the people doing the actual investing? The closer you are to the investor, or being the investor, the better the investment return. For a couple real examples, putting money into 401(k) mutual funds likely offers the very worst returns and actively investing into a fix & flip residential home may offer you a very high return.
If you want better returns then you need to get yourself closer to active investors, right next to them or possibly become one yourself. For example, who has made the most money from the company, FaceBook? The founder, the initial start-up investors, or the stockholders after the company went public? The later and farther away you are from the active investor the less profit is available to be captured.
How can you find or get close to these investors? It is easy as an accredited investor (someone earning over $200,000 or has a $1 million in investable assets), legally they can invest in anything and entrepreneurial groups are always seeking them out for investment projects. People who are not accredited investors have to do more work to locate investments but you can definitely locate them with networking and/or online research.
Be aware that you need more knowledge and expertise for active investing and you should only invest after you have some education about the investment. What are some investing categories? These could be anything: stocks, currencies, bonds, real estate, venture capital, oil, cattle, gold mining, website turnarounds, jewelry, vending machines, watches, collectibles, just about anything that can make money and you have an interest in learning more about the subject. I recently invested in some computer servers and knew nothing about them 4 months ago. Today, I’m knowledgeable and placed my own servers where they can earn the most money for me on a weekly basis. What subjects do you have an interest in studying to make more money from your investing? Are you willing to learn enough so that you can offer investments to others to make even more active money?
Every financially ambitious person that I know actively trades stocks, stock options, or real estate. They do this on the side or as their primary source of income. While this is a relatively small sample of people, it highlights that active investing, of some sort, is part of the wealth building engine for rapidly piling up money. The question for you to consider is: am I willing to learn more about an investment and then invest in a closer location to the actual investment operator?