In the first half of 2021, NFTs generated a whopping $2.5 billion sales and it’s no surprise considering digital artists such as Beeple jumped on the bandwagon, selling an NFT of his work for a massive $69 million.

With the popularity of NFTs - and for that matter, the opportunities associated with NFT trading - showing no signs of decreasing, more and more people are looking to get involved. But, due to the complexity and newness of NFTs, many have no clue where to start.

Brad Wilson, CEO of NuPay Technologies, talks to Finance Monthly to offer a complete guide for those looking to get started with NFT trading.

Step One – Educate Yourself Completely on What NFTs are

The media hype around NFTs has got most of us excited – the thought of being able to bring in additional revenue following two years of economic uncertainty is music to our ears. But you shouldn’t let the attractiveness of NFTs cloud your vision. You need to commit time and energy to understand exactly what NFTs are or there’s little chance of success.

What are NFTs? NFTs are basically digital collectables that have been transformed into verifiable assets so that they can be traded on the blockchain. They are tokens that people use to represent ownership of unique items and often involve intellectual property rights, though it’s important to note that this isn’t always the case.

They are called non-fungible tokens because they represent things that have unique properties and therefore are not interchangeable for other items. For example, some of the most popular NFTs right now are:

• Digital Artwork/Music
• Items in online games shops
• Domain names
• Celebrity tweets
• Essays
• Domain names

Whilst they can be used for almost anything with a unique property, they are most popular amongst those in the creative and entertainment sectors.

Don’t worry if you’re not operating in those sectors though, it doesn’t mean NFT trading won’t work for you.

Step Two – Identify What Type of NFT Trading is for You

NFTs have a huge gambit. The possibilities are endless and the NFT marketplace is adaptable to so many different mediums and contents of life – there really is no real limit.

That being said, it’s not for everyone. Before you even begin ‘giving it a go’, you need to identify whether you can and want to commit to it, and in what way.

There are three main types of NFT trading you can be involved with:

1. Buying and Selling NFTs

This is realistically one of the simplest and easiest ways to get started with NFT trading. It requires little time from your end as you are trading already developed digital assets rather than developing your own.

A point worth noting here is that you’ll need to be familiar with how cryptocurrency works. NFTs are purchased via specialised marketplaces online using funds from your digital wallet - there are a few marketplaces out there that allow flat purchases or credit cards, but they are few and far between. This means you’ll need to not only create a digital wallet that supports NFTs, but you’ll also need to be prepared to fill it with cryptocurrency ahead of your purchases.

You can buy and sell NFTs online via specialist marketplaces or apps. There’s a new platform coming soon, PRISM, which is also a great marketplace for artists to trade and they accept cash - credit cards are on the horizon too.

Remember, all transactions are recorded on the blockchain and only once the sale is verified will the NFT appear in your wallet.

2. Purchasing NFTs as an investment

Though purchasing NFTs without the intention to sell isn’t necessarily a direct form of trading, it’s still an option for building up a digital asset portfolio - and one which might be more suitable for those who want to dip their toes into the market before going full steam ahead.

Although no one knows what value an NFT will have over a period of time, there are a few research methods available to the investor which can help decide which NFT to buy. Community is a big factor for some. You may want to consider whether the community is organic and whether they care about the project.

Another consideration is who created the NFT. Is it an anonymous individual or organisation? Is it a reputable brand or a famous artist? Do the developers have transparent and realistic plans for the project? Conducting due diligence is crucial to avoid scams and rugpulls.

A few other things to consider when purchasing NFTs with no intention to immediately sell are:

• Is it a 1/1 piece of art by a world-famous artist?
• Are you buying the rights and royalties to a famous musician's song?
• Are you buying virtual land which enables passive income streams?
• Is it one edition out of a million NFTs distributed free by a globally recognised brand?
• Does the NFT come with exclusive perks such as entry to private events or access to future NFT sales?

3. Creating and Selling NFTs

Creating and selling NFTs isn’t one to approach lightly. Yes, it can be very profitable, but it doesn’t come without understanding the market and knowing exactly what to expect.

You’ve heard the saying “if you fail to plan, you plan to fail” right? Well, it’s even more true in the world of NFT trading. The first place to start with planning is documenting the type of NFTs you are able to and want to create and sell. From here, you’ll be able to identify what capacity you have to create them and how many, on average, you can create and sell each month.

Next, goal setting. Everyone loves goals and science has proven they are effective in helping us stay motivated. Just remember, it’s likely that if you’re a sole creator, you’ll need to be involved in the creative process, delivery and bookkeeping, so you’ll need to keep your goals to a manageable standard.

Lastly, research your audience and which NFTs are selling well at the moment. Just like with any business, having an audience and market research to hand will aid your business’ development.

4. Choosing the right software for NFTs

Depending on your goals, it could be worth investing in some software. If you do plan on creating more ‘classic’ style art, for example, looking into software that allows for photoshopping, animations, and graphic design could benefit you. However, if you are looking at working in the metaverse or creating video game assets you would be better off looking at different software. Many current software providers are expanding their services to include the NFT space, for example, Adobe, who are launching new NFT functions within photoshop.

If this is something you are unsure about, there are learning platforms everywhere. Taking a Masterclass, or simply watching some YouTube videos can help you disseminate what will work best, and it will also help you broaden your knowledge.

In terms of trading NFTs, you shouldn’t need any pieces of software to successfully do this. The same goes for creation of NFTs - you don’t need additional software to be successful.

Step Three – Understand Your Tax Responsibilities

When it comes to tax responsibilities surrounding NFTs, many fail to understand exactly what they need to declare. As a result, taxes are largely unrecorded. Though in the US, officials are slowly working towards keeping track of all of this, it’s still heavily reliant on the individual person to keep close records on their dealings.

The bottom line is, digital currency is still money that you possess. And as NFTs use cryptocurrencies and are recorded via the blockchain, they are reportable transactions that need to be declared.

The best way to get a grip of the situation is to manage the record-keeping and organisation of trading from the very start. You have to be organised and you have to have a plan in place to keep track of your incoming funds and outgoing funds. It’s critical to note all the income you’re generating, costs that you’re incurring - from minting fees to listings to logistics - and also wider development costs that you may have internally.

NFT tax payments are part of a new landscape. The good thing is that NFT marketplaces are taking steps to assist, offering solutions that support tax filing and providing information on what’s required for tax filing. You see, NFT marketplaces are trying to be as compliant as possible with government regulations, contrary to popular belief.

Be Prepared for Challenges

It’s vital when first starting out that you manage your expectations and prepare yourself for the challenges ahead.

About the Author

Brad Wilson is the Founder and CEO of NuPay Technologies. With over 30 years of investments experience and the FinTech landscape, he is now driving professionals to pave the way in the blockchain industry. He has grown Climb Investment’s portfolio year after year, and NPC has become one of the largest card processing companies in the state of Ohio under his leadership. Now at the helm of NuPay Technologies, Brad has enlisted a spectacular team of like-minded, driven professionals to deep dive into the world of blockchain technology and NFTs!

As I write this we are already well into the new year and it’s becoming clear 2022 has a very different outlook from last year when the “everything rally” was fuelled by easy money, ongoing COVID recovery and mitigation spending programmes, the market’s belief central banks would act to avoid any market instability from derailing sentiment, and COVID uncertainty.

 This year has opened with a much clearer perspective on how quickly central banks will act to address inflation, normalise rates and unwind the quantitative easing programmes that juiced markets with liquidity over the last decade. Welcome back to grown-up markets!

The critical uncertainties are how destabilisation rising/normalising rates become, how inflation – “transitory” or “persistent” – develops (and the danger it morphs into stagflation), and how quickly the global economy puts COVID-19 behind it to start growing again. That leaves geopolitical tensions over Ukraine and with China as the other known unknowns.

My tech valuation stupidity indicators – ARK, Bitcoin, Tesla - opened the year into negative numbers suggesting fundamental analysis is coming back into vogue.

In short, investors are going to have to think hard about what this market is telling them through 2022. The game is changing. One aspect I expect to change dramatically is “euphoric” market sentiment – the everything rally fuelled speculation to supercharged irrational levels. As a famous boxer never said: “I go into the fight prepared with a plan to get rich – which I stick with right up till I get punched hard in the face”.

Sentiment, especially towards get-rich tech scams, is changing. My tech valuation stupidity indicators – ARK, Bitcoin, Tesla - opened the year into negative numbers suggesting fundamental analysis is coming back into vogue. To be fair, Morgan Stanley disagrees with me on Tesla – predicting a rally to $1400 on the back of improving numbers and it’s already on the final lap of the EV marathon when everyone else is still tying their shoelaces… really? I predict everyone could be making decent EVs within a few years. But they won’t be… and to find out why, keep reading.

I would never grace my market haverings with the legitimacy of being “predictions” but let’s run through some ideas for the coming year.

Stocks

Inflation is nailed on – which is perversely good for stocks on a relative basis. The upside will come from higher corporate dividends as the globe recovers from COVID. Sound stocks which will continue to beat risk-adjusted bond returns. But it will be a selective market – distributable profits matter as rates rise, spelling a crisis for the tech sector where unprofitable firms telling the pursuit of size over returns will struggle. In a rising rate environment, fundamental value stocks will outperform. I’m also expecting an ESG backlash to benefit the detest oil majors as energy shortages in Q1 trigger a fundamental review of climate change transition, and the acknowledgement we can’t dump gas overnight and expect the global economy to keep working.

If we assume the global economy stages a covid recovery I’d expect a knew jerk Q1 market rally, before rising rates and lower liquidity sees a pretty flat second half.

Consumers

This is not going to be a good year for consumers - tax rises, massive increases in energy bills, inflation of food, accommodation, and modern necessities like Netflix will dramatically hit discretionary spending. Wages are likely to remain sticky for most workers, unless they are prepared to move into the more challenging sectors like service, entertainment and logistics where wages are rising. Issues like consumer exposure to interest-free debt (like Klarna) could prove “interesting” – if discretionary spending falls, then so will the amount of consumer free-cash to service debt.

Inflation

Forget transitory – that’s a 2021 expression. Supply chain bottlenecks triggered inflation – but they have themselves spawned significant consequences. We’re now seeing higher wages and supply chains evolving. Energy prices will hoick inflation. While 6-7% inflation rates will characterise the early part of the year we may see moderation to 4% later – but that will be remained sustained as the economy adjusts and finds a new equilibrium at a higher permanent inflation rate.

Bonds

The market now expects the Fed could hike four times this year. The Bank of England has already hit the button. Rising rates mean a bad year for bonds – but remember they are also the ultimate safe haven if markets snap. We’re likely to see an acceleration of corporate defaults which have been artificially low for over a decade due to ultra-low rates allowing unfit companies to survive – and that could get very messy due to terminally dismal liquidity in bond markets – which will set like concrete when the selling starts. Corporate spreads will widen – and the markets will have to relearn the fundamentals of credit strength.

Crypto vs Gold

No contest. Gold will win. Crypto enthusiasts can argue gold is as destructive to the environment as Bitcoin. Really. But it’s also real. Bitcoin isn’t.

Energy

2021 demonstrated the dangers of Energy Sovereignty. Without it, nations are vulnerable – as Europe is finding out. Ensuring sufficient stocks of energy – particularly oil and gas – will become paramount. ESG concerns will be dismissed as it becomes clear the optimal routes to Net Carbon Neutrality by 2050 depend on a phased approach with gas replacing coal before gas can be replaced itself. The likelihood is for oil and gas prices to remain elevated through 2022.

Renewables

Will 2022 be the year the world wakes up to the fact wind and solar might be marvellous in terms of fooling the people we’re greening the planet? They are the least efficient source of power, more expensive than expected to maintain, but can achieve easy funding at tight levels because every institutional investor wants to show off how green and ESG compliant they are by holding renewable assets. A better route to zero carbon involves a much wider range of non-CO₂ emitting, but more “difficult” energy sources such as tidal, nuclear and clean gas, and mitigants like reforestation and better waste carbon sequestration. These are all achievable – but difficult. Nuclear fusion – will remain a tomorrow solution. I haven’t mentioned hydrogen – because it’s far more difficult than folk expect.

EVs

A world where Rivian made 1400 cars in 2021 but is worth more than the German auto sector has never made much sense. It makes even less when we appreciate that every single EV on the planet today is based on lithium batteries. Lithium is a nasty, dirty dangerous element that will kill us all if it leaks into the water table. Whatever Elon Musk says, it is very difficult to recycle. If we are going to make 35 million EVs by 2030, then we either mine every single atom of it on the planet or hope that a friendly asteroid comprising pristine lithium and cobalt makes a soft landing (as it didn’t happen in the film “Don’t Look Up”). Otherwise – we probably need a rethink on EV power – soon!

However, while the concept has actually been around for some time, it is only in the last few years that sustainable investing was gaining any significant traction. Then the COVID-19 pandemic hit and, as it rippled across the world, many proponents feared the worse for sustainable investing’s trajectory, as governments, regulators and investors switched attention to short term recovery measures.

But the worst did not happen, in fact, quite the opposite. The buzz about sustainable investing has continued to grow louder, as we are increasingly aware of how interconnected we are, but also the glaring inequalities we face. So, what does this mean for us now, as we look beyond the pandemic?  2022 appears to be the year that sustainable investing is set to skyrocket.

Sustainable investing explained

Sustainable investing is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact. Various other terms are often used such as responsible investing, impact investing or ethical investing – while there are nuanced differences, it’s fair to say that the commonality is to achieve positive change, invariably with a social or environmental dimension.

However, sustainable investing isn’t just about avoiding investing in companies that do harm. There is a new class of investors actively seeking out companies that address daunting social and environmental challenges while also delivering financial returns. These companies fall into a wide range of industries and sectors - ranging from food to transportation, from healthcare to education – the universe for sustainable investors is extensive.

Jumping on board

Even as recent as five years ago, the mainstream investment community was largely disengaged from discussions about sustainable investing. These conversations remained firmly within niche corners of the industry. This is shifting dramatically, with most big investors now believing sustainable investing to be good risk management, leveraging the practice to help manage risk in uncertain times. For sure, the COVID-19 pandemic has been somewhat of a game-changer in this regard because it turns out that companies that manage sustainability risks better, manage other risks better as well.

It helps also that some big names are getting more vocal about sustainable investing. Perhaps a pivotal moment happened in early 2020 when Larry Fink in his annual letter famously stated that Blackrock would put sustainability at the centre of its investment strategy. With all this momentum underway, we are going to see investors strengthening their ESG commitments and demand for sustainable and green products growing at a rapid pace.

The role of policy and regulation

There is a great deal happening on the global policy agenda too which is shaping the way many investors are thinking about sustainability. The Paris Agreement on Climate Change gave us a global carbon budget, and we are seeing widespread commitments being made by corporates and investors alike to achieving the Sustainable Development Goals. All this bodes well - and let’s face it, now we have the US back at the table, things are certainly looking up.

On the regulatory front, the European Union is leading the charge, with its Sustainable Finance Action Plan a sea change for investors. This includes new requirements to disclose the sustainability credentials of funds and regulations aimed at boosting transparency. The EU is certainly out front on sustainable finance regulation but countries around the world are watching closely on its success in implementation and are likely to follow suit in the months and years to come.

Looking out for sustainable stocks – what is out there?

The sustainable investing universe is wide and ESG is a broad church. However, as we look to the future certain themes and issues will gain more attention than others. For example, climate change will remain a top priority for many investors. At the end of last year, COP26 pulled together some significant private-sector commitments, particularly around driving trillions of dollars towards climate solutions. The momentum is clear as many large corporates make net-zero commitments, often more ambitious than national commitments. These are the companies that are worth looking at because they are embracing the inevitable.

At the same time, these actions are also being spurred on by a push back against high-carbon companies, especially Big Oil. Last year, a number of global fossil-fuel giants suffered embarrassing rebukes over their lack of climate change action. Investors are taking note and are increasingly willing to force companies to reduce their carbon dioxide emissions quickly.

Interestingly, the pandemic has shone a spotlight on social issues, pushing many investors to reconsider the management of social risks within their portfolios. This elevation of the ‘S’ in ESG is likely to continue. At the same time, the Black Lives Matter movement is bringing into sharper focus the lack of meaningful progress on racial equality and progressive investors are considering what action they can take. Diversity will continue to matter.

Take, for example, the growth and traction of gender-lens investing – an approach that integrates gender-based factors into investment strategy, process and analysis, in order to deliver positive benefits to women and girls. It is a growing sector and attention is not only coming from sustainable and impact investors. The evidence is stacking up as research continues to demonstrate the compelling case for gender diversity in the workforce, for overall economic growth, as well as improvements in innovation and productivity.

Still some challenges to overcome

There are still challenges to overcome to embed sustainable investing as the ‘new norm’. Disclosure and ESG data remain thorny issues, with concern that data is still fragmented, disclosure is inconsistent, and the lack of standardisation holds investors back. We still have some way to go on the regulatory front too – while the EU has been a front runner with its sustainable finance agenda, there are some delays as well as ongoing heated debates.

There is also increasing concern over the issue of greenwashing which is leading investors down the wrong path in some instances. Particularly for retail investors, where many are relying on certain labels such as ‘green’ or ‘SDGs’ or ‘gender diversity’ to guide them in the right direction when they make an investment decision. The problem is that sometimes these labels are not properly assigned, or maybe stretching the trust. This gives the investor a false sense of comfort, not to mention the damage it does to the reputation of the sustainable investment industry.

The important thing is to be aware of ‘greenwashing’ - some companies and funds can do a good job at ‘greenwashing’. Corporate marketing and PR efforts can hide a whole host of sins and this makes the job of sustainable investors even harder. It requires sustainable investors to do their research, check against third-party sources and undertake thorough due diligence.

Reasons for optimism

Despite these challenges, we have many reasons for optimism and 2022 is likely to see a sustainable investing boom. Perhaps one of the most exciting developments is how retail investors are waking up to the sustainable investing trend. Interestingly, research tells us that a lot of this drive is coming from women as well as younger generations. For certain, new audiences and new conversations are to be had – and the finance industry needs to be ready to deliver.

About the Author

Jessica Robinson is a leading expert on sustainable finance and responsible investing, and author of Financial Feminism: A Woman's Guide to Investing for a Sustainable Future.

Find out more at moxiefuture.com

Currently, the record for the most expensive car ever sold at auction is a Ferrari 250 GTO, worth £52 million. A modern classic won't fetch that yet, but perhaps it could in the future.

Collecting cars isn’t always about making money, though, and some think of them as passion projects. However, if they just want the joy of driving a rare car then it’s often a no-brainer and the collector will pay whatever the asking price is. 

A car is one of the most valuable investments most people make but are modern classic cars worth investing in?

What is a modern classic car?

As far as modern classics go, there is no official category of car that qualifies it as a modern classic. A car can evolve to become a ‘classic’ for a number of reasons:

• it had a large cultural impact
• its style is unique 
• its design is exceptionally eye-catching and popular, or
• it belongs to a certain era.

Modern classics are typically seen as cars from the 1980s through to the 2000s. Some act as investment cars for those in it for the money, while others remain sought after for the pure driving pleasure gained by their owners.

Valuable reasons for investing in modern classics

Investing in a modern classic car could lead to significant gains in the medium to long term. Car auctions boomed during the pandemic and buyers didn’t lose their appetite for a ‘new’ set of wheels in that time.

“It’s a buoyant market and online auctions have made it more accessible to more people,” says tech entrepreneur Tom Wood, CEO of Car and Classic. “Modern classics – that’s anything from the eighties to the noughties – are really flying, both from an interest and a pricing point of view.”

A modern classic that is on the cusp of becoming a bona fide classic can see its value continue to soar while it ages. (As long as it runs and stays in great condition, of course).

Investing in classic cars can also turn out to be a great business decision if you intend on using them as a boost to your pension fund or savings pot. Naturally, as with all investments, there is a risk involved and no certainty. But, with classic car valuations increasing in recent years, a modern classic can be bought for much cheaper before steadily rising in value as the years
go by.

Things to consider before investing

Looking for an available modern classic can be a time-consuming search and it’s important to research prices before investing and consult the experts. It’s going to take time to gather the required car industry knowledge to have a good feel for what is a modern classic and what represents good value.

Investing in a modern classic can be more of a risk than something older, as there is still a chance it won’t remain favourable in the eyes of collectors. However, classic cars that are too old start to lose their value as investors get younger and no longer desire them. This creates a window of opportunity, albeit a pretty slow-closing one.

Servicing costs associated with classic and modern classic cars are worth considering before investment. It’s not just the labour you will have to pay for but the specialist parts that come with restoring or servicing the classics.

“Your classic Mercedes-Benz needs regular servicing to keep it running smoothly and maintain its history and potential resale value”, says John Haynes Mercedes, a classic Mercedes-Benz restoration and servicing expert.

Originality is important for the potential value of any classic car, including those in the modern classic classification. ‘Restomods’ have seen a surge in popularity, which are classic cars restored using unoriginal parts. These can be significantly lower in value than cars complete with authentic parts.

After investing in a modern classic, it’s vital to insure it. Classic car insurance typically covers extras like breakdown cover, salvage retention and spare parts.

Modern classic cars worth investing in

There is an ever-growing list of modern classics. One great example is the Nissan Skyline R34 GT-R. In 1999, it cost $45,000 new and now, over 20 years later it is worth closer to $71,000.

The Skyline was a Japanese import must-have in its heyday and its legacy has grown since then. If you can even get your hands on one, its value is only going to keep rising. Some dealers are even shipping out versions of this modern classic for as much as $300,000!

German cars from the 1990s are also seeing considerable interest in the auction market, with Mercedes-Benz, Porsche and Volkswagen all performing well and exceeding their estimated values. With classic cars increasing in value more quickly than gold in recent years, investing in classic cars, modern or not, is a fun way to grow your personal wealth.

How the pandemic affected car prices

Almost every industry proved it wasn’t ‘bombproof’ as the pandemic hit and hamstrung them. The car industry was no different and manufacturers are still feeling the aftereffects of the pandemic.

New cars are tougher to make than ever before due to supply chain issues, which has caused a boom in the used car market. However, just because used cars are now more valuable than ever doesn’t make them a modern classic or a great investment.

Prices in the used car market are all over the place and it’s dangerous putting too much stock in it right now. An expensive purchase doesn’t make it a good one, and when new cars do come out with more regularity, as expected in 2022, used cars bought during the pandemic will start losing value again.

Takeaway

At the right price, with the right knowledge and with all the expenses considered, a modern classic can be a shrewd investment. Values of classic cars continue to rise and while there is a risk, there is a really good chance to see a return on your investment.

Unfortunately, when talking about investing, you also have the potential of losing a decent amount of money. Some have even had to file bankruptcy to cover the cost of their losses. That is why it is so important to know what you are getting into, and that you are prepared and educated.

Finances

The first, and most important, step is to sit down and go through your finances. You need to have a few things in order before moving forward with your investing plans. First of all, if you have any debt, you should pay it off first. That means any back debt, such as student loans or bank loans. No need to include monthly expenses because that will be in your budget, which is next. If everything is budgeted in, and you have some money left over, you need to consider one more thing. It is suggested that you have a savings account big enough to cover 3 to 6 months of expenses, “just in case.” If everything is in order, and everything is covered, feel free to go to the next step.

Approach

You will need to decide how you are planning to invest. You need to analyse yourself and truthfully answer a few questions. Are you educated enough to make your own investments? Do you have the time to monitor your investments and keep them positive? Do you enjoy crunching numbers? Do you like completing research every day? Now you need to decide if you are going to do everything by yourself, if you plan to hire someone, or if you plan to use an online platform that will do most of the work for you.

Education

No matter what direction you plan to take, you need to understand the lingo. That means that you need to look over a glossary of terms and keep it saved. There are basic terms that everyone in the business will use, so you need to be able to understand them if you want to be able to make an informed decision.

Decision

You need to decide how risky you want to be. You must remember that the higher the risk that you take, the more money you can make. But it means that you have a higher chance of losing some big money. It all comes down to you, so you need to decide how you want to approach it. The best thing that you can do would be to take a medium risk stance. You will not profit as much, but if you do end up losing it will not be the end of your world.

Scams

Be careful of who you choose to deal with, and to whom you give your investment money or information to. As with anything else that deals with finances, people will target others that are unaware of how they do things. “If something sounds too good to be true, it probably is.” That is an old saying, but one that is full of truth.

Final Thoughts

The best thing that you can do before investing, and after you have some money in the pot, is research. If in doubt do not invest in it. If you are using an online platform or going through a professional investment financer, you will still want to keep track of your interests. You truly never know what can happen, so stay educated and make informed decisions.

However, the idea of making investments can be quite daunting if you've never done it before but it is important to educate yourselves on the matter. "If you take a little time to learn about trading stocks in college, you can become financially independent much earlier than otherwise.", says PapersOwl editor, John Russel, in his research paper on the matter of individual stocks. So, if you're a college student or even a graduate and you are unaware of terms like an investment account, a retirement account, and a brokerage account, don't worry. Our simple guide will help you start investing without having to worry too much. 

A Little Money Is Enough

When you think about an investment, you might think that you need to have hundreds of dollars to invest in a stock or other assets. While more capital will help you generate larger amounts, you don't need too much for investing as a college student as you can begin doing it even with just $5 a month. All you need to know is which way you want to go when it comes to using an online broker, a robo-adviser, or a micro-investing app.

Easy Ways To Invest

1. Online Brokers

In very simple terms, such a broker is the web-based platform of financial companies that you can utilise to put money in mutual funds, bonds, and more. You can manage your portfolio via this platform and get all the information you need to handle your investments. 

2. Robo-Adviser

If you want a more automated process to handle your money, you may want to use a Robo-Adviser. These are apps that utilise various algorithms to find the best options for you based on how much risk you wish to take. Like traditional advisers, these will manage your portfolios for you and charge a small fee to do so. 

3. Micro-Investing Apps

For even more automation, consider using a micro-investing app. Such apps are designed to help you make money while you spend money. They can round off your purchases to the nearest dollar and then send the leftover change to your savings account after a minimum amount is collected. With such options, college-goers can become investors with very little cash. 

What Assets Should You Consider? 

When you want to begin generating wealth from an early time for the betterment of your future, you need to carefully consider which assets you want to put your cash in. You should be aware of the top investment themes in 2022 as well to stay updated on current trends. To keep things simple for students though, here are some of the general options you have that offer various levels of return on your investment.

1. Mutual Funds

This is a very good starting point for any investor as the invested money goes into a pool of capital that is managed by a professional. The manager makes all the decisions regarding how to invest the capital and the people involved don't have to do anything more. 

2. Index Funds

When you put your income in an Index Fund, you are essentially investing in all of a market index's stocks. A little knowledge of the stock market goes a long way with this kind and the overall risk and cost are quite low, making it a great option for young people. 

3. Bonds

If you don't want to worry too much about fees and don't want to work but rather just put your cash somewhere safe and enjoy life, you might want to buy some bonds. When you do this, you're essentially loaning your cash to the government or a company. In return for your loan, you get interest when you get your amount back. These are some of the safest investment options out there for college-goers and graduates but they do pay lower returns than other higher-risk options. 

These are three of the most basic and safe ways for paying your cash to someone and getting started with investing. There are many more things you can also consider though, so be sure to do your research before making a choice. These options include ETFs, Target-Date Funds, Certificates of Deposit, etc. You could also use a traditional IRA or savings account for even more safety. 

Some Crucial Things To Remember

If you have never traded before and want to build strong portfolios, here are some things you should keep in mind:

• Don't wait too long to get started. Even if you can spare $10 a month, invest it. 
• Always keep aside the capital that you need in the short term to meet your expenses. Only invest the extra cash you have. 
• Do some research before you purchase any assets on your own. Brokers can help you put your cash in the right places but if you want to do it yourself, be sure to know what you're doing. 
• Don't put all your cash in one place or one kind of asset. Always diversify so you don't end up losing all your cash one day. 

Conclusion

As you can see, there are many ways to begin investing even as a college-goer with little cash to spare. There are many open sources that you can utilise to educate yourself about different accounts, exchange markets, assets, and more. And if you want to do as little work as possible, you can always get advice from professionals and share your long-term goals with them to allow them to manage your capital in a better way. 

Cult Wine Investment’s view is that alternative asset classes not only diversify an investment portfolio but de-link it from the ups and downs of the economic cycle. Fine wine in particular has seen incredible stability during some of the most economically turbulent times of our recent past.

Whether it is fine art, wine, vintage cars, scotch, or even a Hermes handbag, a new breed of deep-pocketed and blue-chip investors have the ability to transform personal hobbies and interests into financially beneficial investments. As with any investment, this new asset class comes with challenges, being naturally harder to sell and more subject to personal preferences of the owner. However alternative assets often deliver higher returns than shares in stock market-listed companies.

A source of stability

Historically, investors have seen the price of fine wine display relative stability during periods of wider economic volatility. The most recent example of this was during the COVID-19 pandemic which hit in early 2020. Fine wine’s downturn was both shorter and less severe than most mainstream financial investments, including government bonds that saw huge volatility during this time. At its 2020 low, the global marketplace for fine wine trade, Liv-ex 1000, had only declined by 4% compared with double-digit losses in most equity markets. Even assets that are traditionally considered ‘low-risk’ such as gold, saw greater price swings over these periods. Fine wine also tends to recover quickly and deliver positive real returns even during periods of higher inflation, such as we’ve seen in 2021.

The reason for such stability is due to a number of factors including supply constraints. Only specific vineyards that can produce top quality wines, creating a market of product scarcity. This means that the fine wine market cannot be oversaturated with supply, as with other asset classes such as cars and watches.

This demand-supply balance is aided additionally by the fact that leading producers only make a finite quantity of each vintage each year, with volumes strictly controlled by various authoritative bodies. Consequently, supply of fine wine cannot change by sudden shifts in policy the same way government and central bank policies can influence financial markets. With supply constricted, this can help keep price performance consistent and above the rate of inflation in different economic backdrops.

Fine wine is an antidote to inflation

In more recent times, fine wine can provide a substantial long-term hedge against an uncertain inflation outlook.  As the global economy recovers from the COVID-19 downturn, ongoing government spending and high savings rates are unleashing pent up consumer demand, causing inflation to accelerate. For example, the US Consumer Price Index (CPI) hit 6.2% year-on-year in October, a 31-year high. UK inflation hit a 10-year high in October. Inflation surprises have triggered bouts of equity volatility as investors gauge possible shifts in monetary and government fiscal policies. Should a sustained rise in inflation take hold, major central banks could tighten policies quicker than expected, leading to a more volatile backdrop in mainstream financial indices.

This is where real assets, such as fine wine, can shine. It has a sustained track record of delivering positive, real returns over the long term that have outperformed the IMF’s worldwide CPI inflation rate.

The unique benefits of fine wine investing

Beyond the pure financial benefits, fine wine has a lot to offer.  Investors’ personal passion in such investments, and indeed Cult Wines itself, goes beyond a physical financial transaction. Investing in fine wine allows access to, simply put, more opportunity: elite experiences; like-minded wine enthusiasts; the exploration of new grape varieties, producers and products. Investments at this asset class level are therefore both a personal and financial choice.

In more recent times, fine wine can provide a substantial long-term hedge against an uncertain inflation outlook.

Investors with Cult Wine Investments can gain access to fine wine markets from a lower base, slowly increasing their portfolio size over time, rather than buying big on their first investment. Fine wine investments can also bring flexibility, easily sold in variable sizes at different times, as and when needed.

Wine is also unique as an asset class in the way that it can be consumed. The more fine wine that is consumed, the less supply of fine wine in the market, the higher prices rise. This trait distinguishes fine wine from traditional assets as well as many other alternatives and enhances its stability over long time periods. In addition to supply limitations, demand for fine wine goes beyond its benefit as a financial instrument. This does not mean fine wine is immune to downturns, however, as there is a significant continuous demand for the product itself, rather than just as an investment, wine can temper most negative price fluctuations. This analysis, paired with the former standpoint regarding wine investment as more than simply a financial exchange further demonstrates how fine wine investment really is surging ahead in investment potential.

Technology driving ongoing expansion

As demonstrated in the results of the Knight Frank’s Luxury Report, wine has seen impressive returns in recent months, rising 15% in the past year. Helped by improving technology, new producers and regions are gaining the attention of global buyers, driving the overall growth of fine wine investments. In 2020, the best performing regions within the Liv-ex 1000 were Italy, Rhone and Champagne rather than Bordeaux or Burgundy, which you’d imagine to be the traditional heavyweights in the market. What this indicates is that, much like a new entrant to the exchange, many corners of the global fine wine market have yet to be fully discovered by a global audience, creating opportunities for alpha generation.

These positive trends are set to continue as investors can expect to see returns on fine wine steadily rise as economic recovery continues and economies reopen. It’s ultimately a really exciting time for the wine investment market and a great time for those who are looking to begin investing in wine as an asset class, either to diversify their portfolio or simply because they love wine. It can provide great price stability against current inflation and is a ‘low-risk’ option for those who are unsure about alternative asset classes.

If you go to the doctor complaining of severe joint pain in the knees, the doctor will likely take you through diagnostic screening questions to see if your symptoms meet the criteria for various diseases, such as rheumatoid arthritis.

A stock screener is just like a diagnostic screener. As the investor, you answer questions based on your unique goals and portfolio, and the screener software spits back stocks that fit those criteria.

Just like with diagnostic screeners in medicine, screening stocks in this fashion is just one step in the process of finding the right stocks. You should always confirm your results by evaluating each stock’s fitness for your portfolio through your own research.

It’s also important to assess your financial situation and define your goals. As you can probably guess, this should happen before the screening stage, because your circumstances and goals will define your criteria.

To recap, here are the steps you should follow when screening for and selecting stocks:

1. Examine your circumstances and define your goals
2. Find stocks using a basic or advanced stock screener
3. Confirm findings through your own research

Choosing a stock screener

As you can see above, you have choices when it comes to how comprehensive you want your stock screener to be. Some screeners offer both basic and advanced versions – typically with tiered pricing or by subscription – while others are either free/basic or advanced/customizable only.

In this article, we’ll cover the benefits of advanced stock screeners, how to use them, and what kinds of investors they’re best suited for.

What is an advanced stock screener?

Think of the difference between how Macs and PC computers are marketed:

• Mac: Ease of use, good for beginners who don’t want or know how to make decisions about their computer’s operations and interfaces
• PC: Operations and interfaces are highly customizable, giving you more control, but this requires more experience and knowledge. With great power comes great responsibility!

Basic stock screeners are the Macs here. They’re great for when you’re first getting started investing, because they offer standard, simple metrics, such as market cap, P/E ratio, gains/losses by time period, share volume, etc. The key takeaway is that both basic and advanced stock screeners are useful, but for different types of investors.

Why should I use an advanced stock screener?

If you’ve been in the stock game for a while, you might be ready to get more hands-on with your stock screening process. Because advanced stock screeners offer a wider range of customizable metrics, they give you the chance to apply all that knowledge you’ve been gathering in ways that are more tailored to your unique portfolio.

In other words, they give you more control.

Are there downsides to advanced stock screeners?

Think back to the Mac vs. PC example. If you don’t know a lot about computers, using a PC with highly customizable operations isn’t very useful to you, because you don’t know what any of the options mean. In fact, it will probably make it harder for you to use the computer!

If you’re new to stocks, get your feet wet with the Mac of stock screening: basic stock screeners. As you get more familiar with stock trading through experience, you’ll finetune your portfolio and financial goals, and you can decide at any time to get your hands a little dirtier with advanced stock screeners.

Recap: Primary cons of advanced stock screeners

• Not good for beginners who know little about the different criteria
• Typically focus only on quantitative data, so you’ll need to consider qualitative factors separately
• Industry-specific blindspots

How to get started with stock screeners

TheBalance provides a great starter list of free and freemium (that is, free/basic and subscription/advanced options) screening software. Starting with free basic versions can be a great way to try out different screeners and find which one you like best, even if your goal is to eventually use an advanced screener.

Summary & takeaways

Remember, while stock screening is a crucial part of building your portfolio, it’s only one part of many. Follow the steps below to get the most out of both basic and advanced stock screeners:

1. Define financial goals and criteria
2. Use a basic stock screener (beginners) or advanced stock screener (veteran investors)
3. Finetune portfolio through separate research, looking out for industry blindspots and considering qualitative factors not included in the screener

SPACs flip the usual process on its head. A SPAC is formed by wealthy sponsors who come together and create a company with the purpose of listing it on a stock exchange. They then have two years to find a target company to merge with who wants to go public. People are able to invest even before a target is found, despite there being the SPAC having nothing to sell. Eventually, the SPAC and target company merge, which in effect takes the company public without needing an IPO.

The market has grown considerably in the last decade. In 2013, there were 10 SPACs with roughly $144 million in assets. When you fast forward to 2020, 200 SPACs went public and raised more than $70 billion. This is a massive increase to rival the IPO market. 

There have been several high-profile companies to go public via the SPAC route in recent years, such as Virgin Galactic, DraftKings and Nikola. These are all multi-billion dollar companies that shone the spotlight on the method. The question of SPAC vs IPO is now a real dilemma for founders. Will the boom continue into 2022?

Money looking for a company

The IPO is well-known to be a long, difficult process whereby a startup can spend months dealing with investment banks to get everything ready. It demands a lot of effort from the founders and their teams.

On the other hand, SPACs bring the money to them. As the sponsors are usually industry leaders or experienced financiers, it makes the job much easier and cheaper for the founders. These third parties have all the information and know-how to guide the startup to where it needs to be to initiate the reverse merger.

High-flying SPAC sponsors are also great members of the team for startups even once the company is public. It’s a way for a startup to add a valued and trusted advisor to their team who has a vested interest to help them succeed.

Sponsors themselves may prefer investing through SPACs because they can find out more about the future of a company before investing whereas this isn’t allowed in a traditional IPO process because of the liability risk associated. The reduced formality can be a boon for those who like to get their elbows dirty.

Another advantage for founders is that the initial volatility of a SPAC public offering is usually much lower than an IPO. We’ve seen huge surges in the stock prices of IPOs such as Bumble and Snowflake in 2020, which leaves money on the table. Traditionally, companies have put off their IPO for significant periods when the market is volatile and they wait for favourable conditions. Going through a SPACs takes out any reason to delay and means the startup can get the funds it needs in a more timely manner. If harmony with the shell company’s leadership is there, the speed of the process can be lightning fast.

The tried and tested method

There are compelling reasons for startups to stick to the IPO method though. These tend to get far more coverage in the press, and this visibility can be a major lead generation source for companies. Potential customers and retail stock investors may have only heard of them because they were in the news about their IPO. As SPACs are relatively new, they foster less of an attraction for long-time entrepreneurs who dreamed of an old-school public offering.

There’s the potential for long-term gain, too, with an IPO for investors and this is reduced with a SPAC. One comprehensive study by Renaissance Capital showed that the common shares of companies that went public via a SPAC on average lost -9.6% vs the average return of an IPO, which was 47.1%. Only 31% of the SPACs in the study had positive returns. IPOs may be favoured by general investors because they are able to get in at a lower price.

The transparency aspect is another major signal for potential investors. Going public through an IPO signals the company has nothing to hide and has been investigated thoroughly by its partner institutions. This can increase trust when it comes to requesting loans. Those who invest in a SPAC before it has chosen its acquisition target are almost going in blind and are heavily dependent on the competence of the managers to make it pay off.

When market conditions are favourable, the IPO route is more favourable for investors who may turn away from SPACs to invest their money actively instead. Until a SPAC has chosen its target, investors see minimal returns at best.

The big picture

While a SPAC might be seen as a shortcut to going public, it still has to be a successful business to perform well as a growth stock. It ends up in the markets all the same, and if the fundamentals or potential isn’t there then it can collapse all the same. The method of public offering doesn’t change a huge deal in investor’s minds after the initial hype cycle.

The longer process of an IPO can actually be beneficial to a company as it ensures all the correct due diligence has been done. SPACs seem to be decreasing the time from formation to merger, which could backfire spectacularly. As a public company, the startup will need to report its data and be transparent. Rushing this through a SPAC could lead to more headaches in the future.

While the growth in the number of SPACs has increased significantly, there are growing signs the process is already less hot than it was a few months ago. There were 300 SPACs formed in Q1 2021 but less than 50 in Q2 and only 16 in July. As of yet, this slowdown isn’t spooking those in the market, but it should give those who are predicting a revolution reason to pause.

While SPACs are likely to form a larger part of the market in the long run, it’s far from certain 2022 will be the bumper year. With everything related to the pandemic hopefully settling down, the conditions for an IPO will likely be more attractive than it has been in 2020 or 2021, so we may see a slight slowdown in fact.

When searching for something to invest in without a great deal of risk, jewellery may be a good choice, especially when you consider that its value will always grow in time. However, the ease of this process depends on how you tackle jewellery investing. Investing in diamonds, particularly, can be quite tricky if you don’t know what to look for. 

Tips for Diamond Investing

If you want to make the most out of diamond investing, here are a few tricks you should know: 

Be picky

Don’t just go on a buying spree simply because someone says they’re selling diamonds. Choose something that will actually hold value later on when you decide to sell. For one, you should stay away from fashionable jewellery, since it won’t hold much value in the future compared to classic pieces. 

Study before buying

Don’t commit the mistake of thinking that you can’t lose anything when investing in diamonds. If you are serious about investing, you should know the diamond 4 C’s, which stands for cut, colour, clarity, and carat. As always, classic shapes often do well in the resale market. 

Authenticate the diamonds

You have to make sure that the diamond you are buying has the proper certifications from authenticating bodies, such as the Gemological Institute of America (GIA) certification. If it’s too good to be true, then it most likely is. Recent technological advancements have made it easy for scammers to replicate a real diamond that only experts can spot. Before you sign that cheque, ask for certification. If there isn’t any, don’t think twice about walking away. 

Remove emotional attachment

If you plan to go into diamond investing, you should keep an emotional distance on the items that you are buying. Don’t get too hung up on holding on to an item, as it will be more difficult for you to let go later on when you get a good offer. 

Keep a low profile

Don’t go publicising that you’re set on investing in diamonds. This could make you a target for scammers. Keep your items in check, keep your valuables safe, and never meet up in a private place. Go public and never share personal details that will compromise your safety. 

Know your market

When you go into diamond investing, you always have to make sure that you can easily buy and sell. Aside from knowing where to buy, you should also know where to sell your items should you decide to let go of some of the pieces in your collection. You can’t simply go on eBay and list your items for auction there. You have to widen your market so you can be sure that you get the best value for your diamonds. 

If you plan to sell your items online, you have to be well aware of the different payment platforms, delivery services, and even insurance offers so you can build your reputation in the diamond investing industry without compromising your safety and security. 

Diamond investing is rising in popularity as many realise that these items can truly hold their value. However, it still does come with some pitfalls that you should be aware of. This way, you can maximise your financial portfolio. 

The market is a highly unpredictable place. Since trading has been incorporated and improved through the years, now, it's not just buying, selling, or exchange. Additionally, studies and developments were made to help traders, like the trade simulation system. But if there are tools to help traders, there are also traps to look out for. One of them is the bear trap.

What Is Bear Trap in Trading?

A bear trap is a condition in the market where the expected downward movement of prices suddenly reverses up. When prices in an uptrend abruptly drop, a bear trap follows. This phenomenon and market performance lure many traders in investing and buying in the market.

Most traders commonly don’t know how to trade bear traps or when they're falling into the trap. A bear trap trading happens when a trader, upon getting attracted to the falling prices, decides to put on a short position when a currency pair is falling, only for the price to reverse and suddenly goes up and moves higher.

How Does It Work?

Usually, other traders set bear traps where they sell assets until other traders are convinced that the upward trend has ended and the prices will drop. As the prices continue to drop, traders will be fooled into believing that it will continue.

And then the bear trap will be released as the market turns around and prices go higher. It’s a false market performance that leads to many traders losing money.

Bear Trap vs. Bull Trap

A bear trap and a bull trap are commonly interchanged or misinterpreted. In the market, these two are opposites. If a bearish trap happens when prices are dropping, bullish traps happen when the market rises and prices continue to move upwards.

Causes of Bear Traps

There are many reasons why bear traps happen or occur in the market. They can occur in any market and commonly happen because bears decide to drop or pull the prices down.

Additionally, the causes of bear traps include:

• Long downtrend or downward movement of prices in the market
• Unexpected events in real life that involve leaders and even politicians
• A continuous strong uptrend in the market

How to Identify a Bear Trap

A bear trap can cause any trader a significant amount of losses. To minimize this kind of risk when trading, it's for the best that you know what to look out for before you get caught in the trap. Some more technical indicators you should watch out for are:

1.     Divergence

Certain indicators provide divergence signals. When there's divergence, there is a bear trap. To look out for divergence, you have to check if the indicator and the price in the market are moving in different or opposite directions. Using this to determine whether a bear trap will occur, when the price and indicator are moving in the same direction, there's no divergence so that no bear trap will happen.

2.     Market Volume

The market volume is a critical indicator of a bear trap. There is a significant change in the market volume when a price is potentially rising or dropping. However, if there is no significant increase in volume when a price drops, it is most likely a trap. Low volumes commonly represent a bear trap since bears can’t consistently pull the price down.

3.     Fibonacci Level

Fibonacci levels indicate reversals of prices in the market since trend reversals are identified using fibo ratios. This also makes them a great indicator of bear traps. A bear trap is most likely to occur when the trend or price doesn’t break any Fibonacci level.

How To Avoid Bear Traps

Bear traps are risky, and the best way to not fall into any is to avoid them. If you get caught in a bear trap, you can quickly lose money. Here are some ways to help you avoid getting caught in a bear trap:

• Use candlestick patterns like a reversal candlestick. It’s an excellent indicator that can help you avoid bear traps. When you see this pattern formed in the market right after a downtrend, the price drop is too good to be true and will not last long.
• Observe the volumes. The volumes reflect the strength of a bear. If a volume indicator shows no sign of an increase in volume, there’s a low chance of the price being pulled down further by the bears. It’s best not to enter the market at this time.
• Widen your stop-loss orders and don’t place them under the support and resistance line. They should provide a buffer zone that can act as a breather when false breakouts or price drops happen.
• Bear traps happen when there’s a downtrend, so you should check the length of a downtrend. Observe how long the trend has been going and refrain from entering the market when there is a prolonged downtrend.

Bear trap trading is usually utilized for short-selling or shorting by traders. But still, it’s clear that bear traps are risky and best be avoided. You’ll lose more than you can earn. When trading, it’s essential that you know what bear traps are and what indicates a bear trap so that you can avoid getting caught in one. Be patient when trading and don’t get carried away by the price drop in the market.

UBS reported on Tuesday a net income of $1.8 billion for the first quarter, revealing that it had taken a considerable hit to earnings from the collapse of Archegos Capital Management.

The Swiss bank said that it had taken a $774 million hit to revenue as a result of Archegos’s default earlier in the quarter. The hedge fund was a client of UBS’s prime brokerage business.

UBS added that it had ended all exposure to Archegos and that any related losses in the second quarter would be “immaterial”.

UBS CEO Ralph Hamers told CNBC on Tuesday that he was “very disappointed” by the loss, and that the bank is “taking it very seriously”.

“We have started a very detailed review of the different prime brokers’ relationships that we have … in order to really get the lessons learned and make sure we implement them so that going forward it doesn’t happen again,” he said.

Meanwhile, Nomura – Japan’s largest brokerage and investment bank – recorded a net loss of 155.4 billion yen ($1.43 billion) for the first quarter of 2021, its greatest quarterly loss since the 2008 financial crisis. Like UBS, its losses stemmed from exposure to the collapse of Archegos.

The collapse of the New York-based family hedge fund in March has resulted in immense damages for global banks. Credit Suisse, one of the first to report losses resulting from the implosion, took a hit of $4.7 billion.

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Between the UBS and Nomura announcements, total bank losses resulting from the collapse of Archegos are estimated to have reached $10 billion.