6 High-Risk Investments You Can Consider In 2022

Investing is a great way to let your money do the hard work for you and to grow your wealth over time. While this may sound great, in reality, investing is a long game of courage and comes with a degree of risk. And investors should decide whether the trade-off between potential return and level of risk is truly worth it.

You put your money to work in markets, but there’s no guarantee that you’ll double your money. Still, with enough time and good strategy, most investments have the potential to give you a substantial gain on your initial principal amount.

However, numerous investors are instead being attracted and lured to high-risk investments offering a high rate of return in just a short period of time but with the possibility of unattractive losses.

And for every one of these investments, hundreds of investors fail. But if you’re skilled and experienced enough, you can be one of the few investors doubling or tripling their principal. If this sounds like you, then take a look at these high-risk investments you can try this 2022.

Value Investing

With value investing, an investor takes a look at the intrinsic value of the stock instead of the share price and determines potential investments. Value investors actively pick out the stocks that might be undervalued or underestimated in the stock market. In general, value investors are long-term investors that uses various financial metrics to determine the true value of a company.

Value investing is often considered a low-risk investment strategy. However, it still comes with its own forms of risk which can be damaging for inexperienced investors. For instance, a miscalculation on the investor’s part can cause them to invest in less valuable stocks.

In addition, undervalued companies may never become appropriately valued or even decrease from their current value. This risk only increases if investors put all of their eggs in one basket, even after careful research.

For added information, read more here to learn more about value investing.

Trading Options

One of the most confusing forms of investment is trading options, which refers to a financial instrument based on the value of underlying securities like stocks.

Options provide high rewards for investors who are timing the market. An investor who buys an option may purchase commodity equity or stock at a specified price within the future date range.

If the price of the security turns out to be not as desirable as the investor predicted on the future dates, the investor doesn’t have to sell or purchase the option security.

An option is particularly risky since it has time requirements on the sale or purchase of securities. Even professional investors are against the practice of timing the market since it can be difficult to predict. And this is why options can be both rewarding and risky.

Leveraged Investments

Leveraged investing is an investment technique that seeks higher investment profits by using borrowed funds to increase your investment.

This strategy can help double or even triple your gains on investment, and there are numerous exchange-traded funds or ETFs that offer leveraged investing. It is useful for a quick turnaround if you are not interested in long-term investing.

However, leveraged investing can expose an investor to higher risk since if the market or stock you choose performs poorly, leveraging can also double or triple your losses.

In particular, you want to be careful with the ETFs since they are calculated on a daily basis. Just a single bad day on the market and you could end up with tripled losses.

Crypto Assets

In recent years, crypto assets have generated lots of interest from investors and the financial media. Crypto assets include cryptocurrencies, crypto funs, initial coin offerings, and blockchain companies. Cryptocurrency, in particular, has skyrocketed in value in the past decade, promising great returns if you trade right.

However, these investment products are generally considered high-risk due to their speculative and volatile nature.

Crypto assets have a number of specific and common risks, depending on the asset. In general, there are security, volatility, and liquidity risks. Some crypto-assets don’t even have a secondary market, making it hard to track prices or sell your holdings. 

In addition, crypto-asset exchanges and trading platforms are unregulated, increasing the risk of unsecured handling of client funds, assets, and data against market manipulations. Changes in crypto assets are constant, with prices changing with little to no warnings to the investors.

Forex Trading

Forex or currency trading is the largest investment marketing in the globe and continues to grow every year.

However, currency investing and trading are not for the faint of heart or inexperienced investors. It’s best left to the professionals since the quick-paced changes in exchange rates create a high-risk environment for sentimental investors and traders.

Trading on the forex market doesn’t have the same margin requirements as the traditional stock market which can be an extra risk for those looking to further enhance their gains.

For the investors who can handle the added pressure of forex trading, you need to look out for the patterns of specific currencies before investing, in order to minimize the added risks. Forex markets are linked to one another and it’s common practice to go long on one currency while shorting on another in order to protect your investments from significant losses.

High-Yield Bonds

It’s also known as junk bonds, high-yield bonds are bonds that pay higher interest rates due to their lower credit ratings than the investment-grade bonds. Issuers of a high-yield bond are usually startup companies, high-debt businesses, or foreign governments. Some high-yield bonds are from fallen angels which already lost good credit ratings.

High-yield bonds are at risk of defaulting, so they must pay a higher yield than the investment-grade bonds in order to compensate investors. Also, they are much more volatile than investment-grade bonds.

However, not all high-yield bonds fail and this is why they can be potentially lucrative and appealing to high-risk investors.

Conclusion

And there you have it.

Risk will always be a part of any investment. With that said, there are investments that have too high of a risk that’s not a good fit for most people. But, if you have the tolerance for it, trying your hands on high-risk investment options can help you reap great rewards and huge profits.