Year after year, finding the best performing investment asset is the mission of every investor.
But what happens when the availability is to invest €1.000?
Whether it is traditional or innovative finance, such as security tokens, investment strategies remain unchanged.
Among the many references, a very common strategy, but not always effective, leads to analyze the historical yield of the asset classes. It is a question of understanding the percentages of return at an annual level, considering, however, that past performance does not guarantee future returns.
So, in order to better manage an investment portfolio of a capital of 1000 euros, it is better focus on the investor, his profile and needs.
A first key point of analysis concerns the propensity to return risk. A high profile, for example, would aim to invest its thousand euros in assets with high rates of return in the short term, considering the same probability of loss or stoppage of the return on the asset.
Another aspect to be assessed in the investment strategy is diversification, which, however, is lacking when it comes to an initial capital of 1000 euros compared to more substantial figures.
In general, diversification works to smooth out the large fluctuations that assets experience in the short term, so that while you do not make the largest gains, you avoid huge losses.
But for this figure, the concept of diversification is not appropriate; on the contrary, a good manager should eliminate the diversifiable risk in order to let the investment follow the systematic risk, i.e. the risk factor associated with the performance of the market as a whole.
These examples of key points (analysis of historical asset returns, risk appetite and diversification) are not considering other benefits arising from the way the investment instruments used are designed.
Why choose security tokens to invest €1.000 and have more chance of success?
The introduction of STO in the financial services sector guarantees benefits in terms of time and costs that allow both the investor and the entrepreneur to proceed, investing or collecting funds, in the saving mode.
The key to success, in this sense, manifests itself in the implementation of the decentralization of the entire financial system, which would bring its value both in terms of efficiency and cost reduction.
With the security tokens, the regulated securities are issued in the form of blockchain tokens. The technical protocols for the security tokens, legal structures and secondary markets continue to evolve.
Based on various analyses, the STO could simply govern the world of securities and allow us to create faster and cheaper financial instruments.
Tokenization of financial instruments aims, therefore, to benefit all stakeholders by reducing expenses, being easier to use, standardising the format, increasing compliance and reducing friction for global investors.
In this regard, here are some tangible benefits in choosing security tokens as a financial instrument to invest 1000 euros, compared to traditional financial assets:
Legal Fees: it is estimated that the savings on legal fees using security tokens for both the issuer and investors is substantial, compared to private placement.
Blockchain Automation: all (public) blockchain-enabled securities make the financial system automated, on the principles of trustless, transparency and security. Savings are guaranteed for all participants in terms of time and costs.
Administrative costs: thanks to blockchain and smart contracts, disputes and conflicts between shareholders or other issues can be resolved by the system itself, saving on administrative and data management costs.
Investing 1000 euros in security tokens could be not only interesting, but also the solution. In fact, STOs offer new types of investment that are generally not present in crowdfunding platforms or even in listed markets.
In addition, security tokens are innovative financial products that could have attractive returns, complementing the risk return profile of the investor or become an excellent alternative to increase diversification in the investment portfolio.