What is investing?
In terms of online business, here we’re talking about investing money in digital assets or financial markets for the long term. Think months, years, or even decades.
You can profit if the value of your investment increases enough over time, or if you invest in successful companies that pay dividends.
Investing is one of 19 types of online business and considered a Level X online business, according to our framework.
6 Levels and 19 Types of Online Business
Level 1 = Novice
Okay for side income or beer money, but hard to earn a living.
Level 2 = Intermediate
Best for earning a living online when you’re starting out, but hard to scale.
Level 3 = Advanced
Easier to scale and higher income potential, but you usually need significant investment of time and/or money upfront.
Level 4 = Superior
Even more scalable and even higher income potential, but also more complex / difficult / expensive.
Level 5 = Distinguished
Most complex / difficult / expensive, but the rewards here can be massive.
Level X = Wildcard
These are the misfits. Many aren’t even considered businesses in the traditional sense, but they are all ways to make money online. You typically need a lot of time, money, or luck to succeed with anything here.
How can you make money online with investing?
Here are the legit ways I’ve found to make money online with investing…
Buy and Hold
The buy-and-hold approach is most commonly applied to stocks, but Erik Finman applied it to Bitcoin in 2011 and saw the value of his investment increase almost 500x over the next six years…
- Bitcoin Investor
- $2+ million from bitcoin investments
Robo-advisors are automated investment services. You set your investment goals and risk tolerance and let the algorithms do the rest.
Mr. Money Mustache saw almost a 25% return in six years investing with Betterment…
Mr. Money Mustache
- Do-It-Yourself Investor with Betterment
- $40,944 5-year earnings on $167k deposits
Jason Fieber has bought shares in more than 100 businesses. Thanks to the regular dividends earned from those investments, he was able to retire from regular employment at age 33…
- Investor and Entrepreneur
- $1,500+ monthly dividend income
Real Estate Investing
Online platforms like Fundrise let you invest small amounts in real estate projects and earn returns.
This guy tested out Fundrise for 18 months and reported an 8.4% return…
- $1,244 return on $14,813 investment with Fundrise
Pros and Cons of Investing Businesses
- Can be very passive.
- Some markets are very well established and their performance is fairly predictable over the long term.
- Usually requires a big initial investment and/or many years of regular deposits to see a significant return.
- Possible to lose lots of money. Usually happens when investors try to “time the market.”
- Taxes, fees and inflation can offset gains.
Is investing a good way to earn a living online?
It can be if you’re thoughtful, patient and financially literate. Or if you strike it lucky.
In the short term, you’re unlikely to earn a living from investing unless you start with significant capital and invest it wisely.
- Mr. Money Mustache
A popular FIRE blog (FIRE = Financial Independence; Retire Early).
- Mr. Free at 33
Another popular FIRE blog.
- I Will Teach You To Be Rich
Good, fundamental finance and investment advice in this NYT bestselling book.
The robo-advisor I personally use which has given me good returns.