Real Estate , The Stock Market, and Income Producing Websites – the three things you should invest in today, and I’m betting you have not seen number three there before.
A few months ago I attended a Digital Footprint conference in New York. One of the speakers was a financial planner. Now keep in mind I was at this conference because I wanted to learn more about income producing websites, how to build www.RetirementNEXT.com into a major authority site, and to network with publishers, brand managers, and other like-minded entrepreneurs.
What I heard in one of the presentations has altered my thinking. Now you have to know I am in my heart, a real estate guy. I have been buying, selling, managing, and brokering real estate for 35 years. I love it. So number 1 on this list was no surprise to me. Here are the three investment categories:
- Real Estate
- Stocks and Bonds
- Income Producing Websites
I personally switched number 1 and number 2 around. I believe the asset growth as well as the income that can be generated from real estate to be more in my control than investing in the financial markets and I have always treated it as my number one investment option. As to the financial markets, I am not an expert, so I have entrusted a portion of my portfolio to mutual fund managers. But as to number three, I always thought of this as an entrepreneurial venture, not an investment.
I was wrong.
At this conference there were fund managers scouring the conference for income producing websites to add to their portfolios. There were also companies there that managed income producing websites for the fund managers for a percentage of the growth they would bring to the site. What started in the basements and garages of the world selling niche products has grown into – well, Google proportions.
The small guy starts selling items on the internet that is part of his passion – say soccer supplies – and as he grows his business through product sales and ad revenues, he sells the website for a handsome profit to a more experienced operator that will take his original traffic and expand upon it.
These operators will offer a return to the fund manager of, for example, 12% annualized and a share (normally 10 to 50% of the return that is over that initial 12%. This overage (the amount above the 12% that goes to the investor) is called the “waterfall”. The split on the waterfall is generally less for the passive, fund type investors, and greater for the active invests one who plays some roll in the websites acquired. Most operators have a shoulder period – normally about six months, before they start paying out the initial return (the 12% in the above example). This is to give them the time and the resources to grow the income on the site. Initial investments start at around $50,000.
If you doubt the veracity of the intent and its ability to deliver passive income, you have not been paying attention to Amazon, Google, AdSense, and member supported websites. The ability for Google and Facebook to target ads to a very customized base of prospects is mind blowing.
It’s time for the smaller investor to take advantage of these opportunities in their investment portfolios
If you are interested in discussing ways to get involved in income producing websites, contact me at Gfous@RetirementNEXT.com