New trends in financing – or “gambling”?

To me it’s not clear if some new trends are more gambling then investing. I think about stuff like Crowdfund investing or binary options trading (see this site for more details). Both is pretty dangerous in my opinion. Sure, crowdfunding is a trend for years already and binary options are becoming a new investment vehicle but to me the risk is just exremly high. In regards to binary options you really know the risk if you are somewhat familiar with trading. I mean, 400% profit within a few minutes. This sounds too good to be true but it really is true. The risk is just exorbitantly high and you need lots of luck if you want your option ending in the money and make profit. If this is not the case you will lose your whole investment.

I think crowdinvesting can be even more dangerous. The reason is simple: you just don’t really know what’s happening with your investment. Sure, financing a startup or a product idea you like sounds like a reasonable plan but you should also care about profits. Do you really want to support an idea with $500 just because you like it or the initiator? When you browse crowdfunding platforms you see a lot of great products and ideas and a lot of nice descriptions and videos. Everybody wants to convice you that you should invest. But don’t do that without a due diligence. Do your research. You don’t buy stocks after just reading the website information do you? I expect that there will be lots of unhappy investors the next few years and the reason is that most of them are over enthusiastic and overvaluing an idea.