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Why Crowdfunding is a Good Investment for Beginners

Devin Halim Wijaya2 January 2025

0 0 3 minutes read

Investing is becoming an increasingly popular talking points in recent times, especially with increasing financial literations amongst people. However, for beginners, the world of investing can often seem intimidating and very risky. One of alternative solutions to overcome these challenges is crowdfunding. Crowdfunding offers easiness, practicality, and attractive return as value propositions on it’s investment making it an ideal investment option for beginner investors. This article will explain why crowdfunding is a good and easy way to get started with investing.

What is Crowdfunding?

In simple terms, crowdfunding is a way to fund projects or business by raising funds from many people hence the name Crowdfunding. This concept allows individuals from different educational and economical backgrounds to participate in specific projects or businesses and get a share from it’s return.

Crowdfunding can be categorized into several types, including:

Equity Crowdfunding – Equity-based crowdfunding enables businesses to raise capital by selling shares or equity stakes in their company to a large number of investors through an online platform.
Project-based Crowdfunding – Project-based crowdfunding enables businesses to raise capital by selling ownership of specific project to a large number of investors through an online platform.
Reward-based Crowdfunding – Reward-based crowdfunding involves offering backers a reward or product for their financial contribution.
Donation-based Crowdfunding – Donation-based crowdfunding is a type where individuals or organizations seek financial support from the public without offering any tangible rewards or equity in return.
Debt Crowdfunding (Peer-to-Peer Lending) – Debt-based crowdfunding, or peer-to-peer lending, involves individuals or businesses borrowing money from a crowd of lenders.

Also read:Crowdfunding: Massive First Step Towards Endowment Fund

Why Investing in Crowdfunding is Good for Beginner Investors

1. Small Capital, Big Opportunities

One of the primary issues for beginner investors is limited capital and fear of investment risk. Because of this issue, beginner investors are usually starting their investment with small amount of capital. With crowdfunding, people can start their investors with smaller amount started with something like $10. This starting level is far more affordable than other investments like gold, real estate, or even stocks.

Investing with small amounts allows beginner investors to try out various types of projects and gradually develop their understanding of investment. This allows beginners to build an investment knowledge and portfolio without the risk associated with large investments.

Another advantage of investing in crowdfunding is that the offered return on investment in each of crowdfunding projects is usually higher than standard investments like bonds or bank investment accounts. This provides competitive edge to crowdfunding as they able to compensate the higher risk with the higher return potential.

2. Simple, Practical, and Transparant Process

Investing through crowdfunding platforms offers easiness, and does not require too much of financial knowledge. The whole process which is done from user-friendly application allows crowdfunding platform to help investors navigate their investment quickly and efficiently.

By the rules, these platforms have to provide guides, project analyses, prospectus and other form of detailed information to help investors make informed investment decisions. This means beginners do not need to worry about lack of transparency or hidden information about their investments.

Also read:PO Financing with Crowdfunding: Is It Possible?

3. Diversified Investment Opportunities

One of the principles of investment is diversification, which involves spreading your investment across different asset classes to mitigate risk. Through crowdfunding, you can invest in various projects or businesses with small capital with each project or business.

This diversification helps reduce the risk of significant losses resulted by failure of a project. By supporting multiple projects, an investor can spread earning potential from various sources to cover potential losses from a project or two, thereby enhancing the stability of your investment portfolio.

4. Learn While You Invest

Crowdfunding provides valuable learning experiences for beginner investors. By following the progress of funded projects, an investor can learn how businesses are operated, how risks are mitigated, and how the revenue and profit are mad. This process helps improve investors understanding of business and investment.

Through direct involvement in projects, an investor will better understand market dynamics, business challenges, and potential investment opportunities. This practical business experience will help investors when they invest in much more complex investment instruments like stocks.

Also read:How to fund Green Economy Through Crowdfunding

Conclusion

Crowdfunding represents an alternative first introduction to investment for beginner investors because of it’s easiness, low capital requirements, transparency, and diversification opportunities. By starting their investment with crowdfunding, an investor can develop their knowledge which also help them to dive deeper in the investment world.

Zeedsharia offers Islamic crowdfunding that represents an opportunity for muslim investors to profit from halal, real businesses with attractive return and modest risk profile. Let’s embark your investment journey with Zeedsharia and earn halal substantive profit on your investment.