Can I Beat the Stock Market with Impact Crowdfunding Investments?
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Today, at the 1:00 Eastern SuperCrowdHour webinar, I’ll be answering the question, “Can I beat the stock market with impact Crowdfunding investments?” This session will benefit anyone considering even one investment in regulated investment crowdfunding.
You can watch the webinar right here using the YouTube video player above or join us on Zoom. We track attendance in Zoom and reward those who attend ten times with a $100 reimbursement for a crowdfunding investment. Those participating via Zoom can also ask me questions! Join us there to claim your reward.
With the stock market’s historical performance providing both high gains and deep losses, many investors seek alternative paths to achieve meaningful returns while also making a positive impact. This post will provide an overview of the key points I will present during the session.
Understanding the Stock Market’s Performance
The stock market, represented by the S&P 500, has experienced extreme highs and lows. For instance, between June 1932 and June 1933, it yielded a record gain of 162%. Conversely, it also endured a steep loss of 67% between September 1930 and September 1931. More recently, during the 2008 financial crisis, the S&P 500 saw a 56.8% decline over roughly a year and a half.
Despite these fluctuations, the average long-term return for the S&P 500 hovers around 10%. However, earning a steady 10% over the long haul requires impeccable Money management with no room for mistakes or excessive fees. This brings us to the central question: Can impact crowdfund investments offer a path to similar or better returns while contributing positively to society?
What is Impact Investing?
Impact Investing is about creating change through your investments. Unlike traditional investments, impact investments focus on generating positive social or environmental outcomes alongside financial returns. Some examples include:
Reduced carbon emissions from businesses enabling sustainable practices like better solar panels or wind turbines.
Improved health outcomes through investments in companies that promote public health.
Greater prosperity for communities through social enterprises working to build community or enhance social justice.
Investment Crowdfunding: A Brief Overview
Regulated by FINRA and the SEC, investment crowdfunding allows everyday investors to participate in funding startups, Small Businesses, and social enterprises. Since its inception, more than 100 companies have embraced this method, helping entrepreneurs and small businesses raise over $2 billion from roughly 1 million investors. Within this space, impact crowdfunding emerges as a promising avenue for those looking to make a difference while seeking financial returns.
Three Investment Strategies for Impact Crowdfunding
Now, let’s explore three strategies that can help you potentially beat the market:
Yield Strategy
Venture Capital Strategy
Hybrid Strategy
1. Yield Strategy
The yield strategy focuses on investments that generate a steady income, typically through debt instruments like loans. It can be approached in two ways: Hobby Mode and Maven Mode.
Hobby Mode: In this approach, you invest a fixed amount, say $100 monthly, exclusively in short-term debt with interest rates near or above 10%. By consistently reinvesting the returns and avoiding injecting new money into the system, you can create a self-sustaining investment strategy within 24 to 36 months.
Maven Mode: This method involves reinvesting payments plus an additional monthly contribution (e.g., $100). Over time, this compounding effect leads to impressive Growth. For instance, with a 10% yield, you could see your investment grow to $2,644 in two years, $20,484 in ten years, and an astonishing $226,048 in 30 years.
2. Venture Capital Strategy
Venture capital (VC) investments involve funding early-stage startups, typically through professionally managed funds. This strategy seeks returns from the appreciation of the company’s value rather than direct yields. It carries a high level of risk, with most investments resulting in losses, but the potential for exponential gains exists if you pick winners.
Big Fees: Professional VC funds charge high fees, but top funds can deliver annual returns of 25-30%. Bottom quartile funds often fail to return all the capital they take from investors.
Diversification: Investing in a single venture is more akin to gambling than investing. For a VC-style approach, diversification across multiple startups is critical.
Warning: Do not allocate all your capital to venture investments. The long-term horizon (7-10 years) and high-risk nature of this strategy make it a supplement rather than a core portfolio component.
3. Hybrid Strategy
The hybrid strategy combines elements of both yield and venture capital investing. By balancing investments between income-generating debt and high-risk, high-reward equity stakes, this strategy can offer potentially higher returns than the pure yield approach while mitigating some risks compared to a purely venture-focused strategy.
Revenue-Based Financing: A notable hybrid investment type, where loans have no fixed interest rate. Instead, companies promise to return a multiple (e.g., 2x) of the investment over a set period (e.g., five years). This method provides a middle ground between regular yield and venture-style returns, with the aim of achieving risk-adjusted returns above 10%.
After joining the SuperCrowdHour, you’ll have a clearer understanding of how impact crowdfunding can be a rewarding part of your investment portfolio and contribute to a more sustainable and equitable future.
I hope this summary gives you a sense of what to expect in the webinar. If you want to dive deeper into the nuances of these investment strategies, I encourage you to join us for the SuperCrowdHour, where you can ask questions.
Max-Impact Members
The following Max-Impact Members provide valuable financial support to keep us operating:
Carol Fineagan, Independent Consultant | Lory Moore, Lory Moore Law | Marcia Brinton, High Desert Gear | Ralf Mandt, Next Pitch | Sheryle Gilihan, CauseLabs | Add Your Name Here
Upcoming SuperCrowd Event Calendar
If a location is not noted, the events below are virtual.
Impact Cherub Club Meeting hosted by The Super Crowd, Inc., a public benefit corporation, on October 15, 2024, at 1:00 PM Eastern. Each month, the Club meets to review new offerings for investment consideration and to conduct due diligence on previously screened deals. To join the Impact Cherub Club, become an Impact Member of the SuperCrowd.
SuperCrowdHour, October 16, 2024, at 1:00 PM Eastern. Each month, we host a value-laden webinar for aspiring impact investors or social entrepreneurs. At September’s webinar, Devin Thorpe will provide an in-depth answer to the question, “Can I Beat the Stock Market with Impact Crowdfund Investments?” Free to attend.
SuperCrowd Mastermind Group, twice monthly on the 1st and 3rd Thursdays at noon Eastern. This group is for entrepreneurs and small business owners interested in raising money from the crowd. Attend your first meeting free!
Superpowers for Good Live Pitch, September 25, 2024. The Live Pitch will stream simultaneously to the e360tv network, Facebook, Linkedin, YouTube and Superpowers for Good. We hope for an audience of thousands! Watch the pitch and invest in the best!
Community Event Calendar
Successful Funding with Karl Dakin, Tuesdays at 10:00 AM ET – Click on Events
Community Revitalization, Thursdays, 10:00 AM Eastern.
Community Capital Alternatives for Outdoor Recreation Challenges, Kathleen Minogue of Crowdfund Better speaking at American Trails, October 3, 10:00 AM, free.
Main Street Skowhegan and NC3 Entrepreneur Finance Workshop Series, September 17 – November 19, 2023.
Power Your Passion: Funding Social Enterprises Through Crowdfunding, September 19, with Paul Lovejoy, Logan Fahey, Eve Picker and Devin Thorpe.
Krishi Janani PBC Crowdfunding Virtual Office Hour, Sep 21, 2024, Noon Eastern.
Investment Week 24, October 19-20, 2024, Los Angeles.
Crowdfunding Professional Association, Summit in DC, October 22-23
If you would like to submit an event for us to share with the 8,000+ members of the SuperCrowd, click here.
Originally Published on https://www.superpowers4good.com/
