New digital-savvy ways to make investments

Being smart about your future also means being smart with your money. Warren Buffet famously said, "Never depend on single income. Make investments to create another source."
05/24/2016 02:02 pm ET Updated Dec 06, 2017

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Being smart about your future also means being smart with your money. Warren Buffet famously said, "Never depend on single income. Make investments to create another source." The rise of digital technology has been disrupting the traditional financial and investing sector too, with a sleuth of platforms that let you savor a wide range of investment options and not be worried about being swamped by the administrative tasks that come with each investment.

In simple words, an investment platform is more of an administration service for all your investments, both present and future ones. Many people prefer investing in a large number of funds, resulting in a surge of time-consuming paperwork. However, investing through one of the digital platforms greatly simplifies the entire process and allows you to manage multiple funds waiting in your portfolio.

Akshay Mehra, founder of Crowd-Genie, a p2p lending website has this to say about the diminishing roles of traditional banks when it comes to financing: "Banks will need to fundamentally rethink their credit business model for small ticket sizes. I think a lot of the banks will cede the space for loans to smaller companies to crowdfunding platforms as their overhead costs will mean that they cannot be cost competitive".

Four popular platforms that you can find today include:

Crowdfunding
Crowdfunding is an alternative finance form, a practice of funding businesses or projects through the means of raising contributions (monetary) from people, or donors through online-mediated platforms such as Crowdfunder, Indiegogo, and Kickstarter. For investors, access to an innovative product earlier than others is a reward which many youngsters love. For business owners, It serves as mean to gain low-cost capital, without much hassle from around the globe. This allows them to sell their product and reap the benefits from the increased flow of information. Crowdfunding with pre-buying supports creators to attain early response on products.

Equity Funding
For any business, equity is equally as important as air is to an individual. It is more of an open fund investment done in stocks. This allows investors to purchase funds and a basket of stocks with much less trouble than they if they were to purchase individual securities. This is usually possible by selling preferred stock or common stock. Equity funding allows for Instant diversification. It is less expensive and easier to invest rather than buying single stocks, and also cheaper than other platforms (you can avoid higher costs of traction and lower chances of liquidity that follow with individual trading of stocks). The equity funding platforms also make it easy to sell fund shares.

Debt Funding
Debt funding involves the borrowing of money from outside sources. The entire deal is only possible if the person choosing it promises to return the money back with an agreed amount of interest. Sometimes, the term can have a negative implication; companies at the start up stage often turn to debt to successfully finance any of their operations. Actually, the healthiest corporate balance sheets will also have some kind of debt. Note that in finance, the word "debt" can also mean advantage. The best sources for debt funding are banks, but sometimes, businesses can issue them from a private company, family member, or friend.

P2P Lending
Peer-to-peer funding is a practice that involves the lending of money to businesses or individuals via online services that link borrowers and lenders. This is similar to the Crowdfunding since the lending companies must only offer their services through online platforms. These investments tend to be less volatility with lower liquidity. However, they usually come with high interest rates which is attractive to a lot of investors.

The reasons of choosing one of these platforms for investing are many, including social and personal fulfilment.

1. Helping small and local businesses

The typical businesses that list on these platforms are small and local businesses, who have many issues which plague their efforts to scale and grow. By helping them, you help not the ultra-rich to become richer, but elevate society through lesser known ordinary people.

2. Contributing to the entrepreneurial revolution and innovation

If you look at one of the crowdfunding sites such as Kickstarter or Indiegogo, you can find numerous innovative products that were created to solve real problems faced by real people. The entrepreneurial wave has fuelled innovative thinking, and only funding holds them back. By participating and encouraging these entrepreneurs, you too become a part of the ecosystem.

3. Embracing technology for personal growth and finance

By taking charge of your finances, you secure a stable future. It also gives you the opportunity to plan and envision your life and set goals. Having clear financial goals is a great enabler which encourages youngsters to feel empowered and provides the confidence to make good decisions in life.