The Best High-Risk, High-Reward Investments

Are you looking to maximize your investment returns? Are you willing to take some risks along the way? If so, this list of the best high-risk, high-return investments is for you.

There is often a correlation between risk and reward when investing. While some investors choose to play it safe with low-risk investments (due to necessity or preference), others are open to more speculative investments that offer chances for unmatched growth. 

In this list of the best high-risk, high-reward investments, we’re reviewing seven options for those who want to push the envelope. We’ll explore emerging tech and volatile markets in our search for investments that provide high return potential for investors who embrace risk. 

(If you’re looking for a more moderate approach that offers respectable returns with less risk, make sure to review the alternatives at the end of this article!)   

Here are the top seven best high-risk, high-reward investments in no particular order:

The professionals here at Gatsby Investment are not advising you to invest in the high-risk asset classes listed in this article. We prefer a strategic asset allocation that balances risk and reward to provide respectable returns with limited risk exposure. However, some investors are more risk-tolerant, and we want to present options for those interested in expanding their portfolios to include risky investments. 

While all investments inherently come with some risk (as does holding cash rather than investing), the investment types on this list are as likely to result in losses as they are to result in high returns - perhaps more so. So please take extreme caution when choosing any of these risky investments. And don’t invest money that you cannot afford to lose.  

With that caveat, let’s jump into our list of the best high-risk, high-reward investments. 

Cryptocurrency (often referred to as crypto) is digital money that can be used to buy and sell products and services online in much the same way as government-backed currencies. Highly volatile crypto is influenced by factors like technological developments, market sentiment, and regulatory news. BitCoin, for example, won millions for some early investors but has lost millions for others.

Taking crypto a step further, ICOs are a form of crowdfunding for new cryptocurrencies. Investors buy digital coins or tokens for the newly created crypto, hoping that values will increase. ICOs are highly speculative because they often rely on unproven technology and business models. 

Penny stocks are low-priced shares of small companies, typically trading at under $5 per share. Potential price manipulation, high volatility, low liquidity, and lack of financial information make these a risky option. However, investors are drawn to penny stocks because even small increases mean large returns as a percentage of the share’s purchase price.

Venture capital is an investment in an early-stage company with high growth potential. Because the new business is unproven, the risk is high. So those willing to take the risk are rewarded financially if the company succeeds.

Similar to venture capital, angel investing typically involves individuals putting smaller amounts into startups at an earlier stage. The risk comes from the high failure rate of startups. But if the company makes it big, angel investors may benefit even more than venture capitalists.

Exchange-traded funds (ETFs) are bundles of stocks or bonds that are traded on the stock market in real time. However, leveraged ETFs are much riskier than traditional ETFs because leveraged ETFs use financial derivatives and debt to amplify the returns. Leveraged ETF prices can swing wildly and are typically meant for short-term trading.

Wholesaling is a form of real estate investing. An investor will make an offer to purchase a property at a specified price. When the seller accepts, the investor will sell the purchase contract to a buyer willing to pay more than the specified price. Then the wholesaler pockets the difference. The risk comes from not finding a buyer willing to pay more than the agreed-upon price. In this case, the investor is on the hook for fulfilling the terms of the purchase contract. However, the rewards can be substantial, for very little time or energy. 

If you’re looking for strong return potential, but you’re not willing to risk it all, consider investing in real estate. With the unmatched benefits of real estate investing (including tax advantages, equity, cash flow potential, and flexibility), and its low-risk profile, real estate is a good option for many investors. 

Here are three ways to invest in real estate for lower risk, without sacrificing returns.

Investing in rental property provides an opportunity to earn passive income from tenants while enjoying long-term appreciation and tax breaks. With homeownership becoming less affordable by the year, demand for long-term rentals has increased, making rental property investing even safer than before. 

Buying, managing, and selling rental properties can require specialized knowledge and skill, so do your research before purchasing a rental property.

If you have some experience in real estate and/or construction, you might be ready to take a chance on multi-family development. Building apartments can be highly lucrative, particularly when the units are intentionally designed to meet the needs of current, local renters. Shared living units, for example, work well in high-cost areas where renters are seeking to split the rent among multiple roommates.

Real estate syndication is when multiple investors pool funds to finance a real estate project. The project could be a single-family house flip, a multi-family development, or any number of other ventures. By pooling funds, investors can buy into a deal for a fraction of the cost of direct ownership. And the deal is professionally managed by a real estate sponsor who is incentivized to ensure the success of the project. Investors hold an equity stake in the underlying real estate without being responsible for analyzing or managing the construction or operations.  

Syndication cleverly minimizes risk while maximizing return potential.  

If the seven high-risk, high-reward investments presented earlier in this article are too uncertain for your taste, consider investing with us at Gatsby Investment. We are a real estate syndication company with an exceptional track record of successful investments. Since our inception in 2016, every single one of our deals has turned a profit for investors. In fact, with our average annualized return of 23%, we have outpaced the market while successfully mitigating the risk to investors. 

Choose from our unique investment opportunities and enjoy strong return potential without the risk of volatile investments.