Investing money requires research, lots of research. That's true for the stock market, website investments and other forms of investments. Once you have done your research, you can make an educated guess about the investment. What are the risks? What's the worst case scenario? Which return can I expect when I calculate conservatively? Lets say you have 10,000 Dollars that you would like to invest. You have several options. You could put it in a bank account and get a few percent on top of that per year. Barely enough to break even if you include inflation in your calculation. Even with a 5% increase you would end up with 10,500 after the first year, minus taxes and inflation. But you can be sure that the money is still there after the year, that is, unless the bank files for bankruptcy.
The stock market is different. You need to research stocks a lot before you invest your money. And that's where the problems start. You could invest into a fund but would need to do research on that fund as well, or hand the money over to your contact at your bank and ask them to invest. If you are lucky, you may get a 20% or even 30% increase over one year. If you are unlucky, you may end with 0 Dollars. The most likely outcome is the +/- 20% range. If you get 20% you end up with 12,000 Dollars after one year, minus taxes and brokerage fees. You may also get a dividend on top of that. Problem is, you do not have the money yet. You need to sell your stock. (Please note that expert traders may have much higher returns, the average Joe on the other hand will usually end up with less money). And you do not get that extra 20% or whatever directly into your bank account.
Lets take a look at website investments for a minute. I'd like to share two first hand experiences with you. I bought a site about six months ago for 400 Dollars. It generated a revenue of approximately $40 per month from Adsense and Amazon. I paid another $200 Dollars to get guides and articles updated, and fresh contents on the site, and another $400 so far for SEO.
That's an investment of 1,000 Dollars. The site is now raking in $60 Dollars per month and climbing to new heights ever since. If it sticks with 60 Dollars I will end up with 720 Dollars after one year's time. That's a 72% increase in the first year. If I would not have done anything it would probably have returned $480 in its first year, which is a 120% return on the investment.
The second site was more expensive. I paid 23,000 Dollars for it. It earns between $2000 and $3000 Dollars per month. I plan to do light SEO and content generation on that site for about 200 Dollars per month. My first year investment is therefore 23,000 + 2400 = 25,400 Dollars. The money I earn from the investment is conservatively $2000 per month, that times 12 is 24,000 which is almost a 100% return of my investment. Even if all hell breaks lose and the site drops to $1000 per month, I would still earn 12,000 from it which would be more than 40% return.
And that's money that I get right into my bank account.
Websites rise in value not only if their revenue increases, but also if other factors change. And one of those factors changes without the user's doing: Age. A track record of constant earnings over a longer period of time will usually result in a higher selling price.
Websites, like stocks, can crash badly. Most websites rely on Google, Bing and other search engines for the majority of traffic. A ban on Google could seriously hurt the earnings of a website. You'd still have opportunities like PPC but that would require another investment and thorough research.
It is still possible to burn all your money on a bad investment. I see offers for new websites with 100 visitors that are supposed to earn 1500 Dollars per month every day. You will encounter black sheeps among the sellers, which you often can get rid of by looking at a website's track record of traffic and earnings. If the seller is only providing information about the last month or two, you can almost be sure that something fishy is going on. One of the tricks of those sellers is to drive extra traffic to the website in the first month to make it look like it is getting good traffic and earnings. Once you buy the site, the traffic stops and you end up with an almost worthless website. It is possible to spot those if you get access to the stats of a site.
I'm not saying that website investments are the best option for everyone. You need some knowledge in the field, not only when doing your research and evaluation, but also technical knowledge later to move the website and set it up on one of your servers or hosting accounts. I do all that by myself but you could hire someone to do the job. That again costs money.
For me personally, investments in websites are the way to go forward. I have the expertise to evaluate them and the technical know how to maintain them after they have been purchased.
If you do proper research, your websites will return between 40-100% of your investment after one year's time. Even if it crashes in the search engines, you can still work on it to improve the rankings again.
That's another difference to the stock market. Once you have made your purchase there, you are a passive bystander hoping for the best. With your website, you can actively promote and optimize it.
Here are two good sites to get you started with web investments: Flippa.com is probably the best known marketplace for web properties. You find many professional buyers and sellers there, and it is rare that you can make a bargain purchase there. It happens, but it is rare and you need to be fast. Despite its quality, you find many lukewarm and some fraudulent offers on that site.
A second place to buy domains is the Digital Point forum. You usually get less stats and information about a website, and more fraudulent or lukewarm offers because of this. Sites here tend to go for a lower price though and you may end up paying less. Some webmasters buy on DP, optimize for a month or so and sell for a premium on Flippa. That's called site flipping.
You will find other sites where you can buy domains, eBay for instance or Sedo. Good sites there sell for a lot of money.
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