Numbers and Finance by Ken Teegardin, Flickr
No matter where you turn, technology dominates your life. From entertainment to employment to daily living at home, technology is at the centre of everything you see and do. Within this broad scope of technology comes social media which is a dominant force in the lives of two-thirds of all Internet users on a global level. Think about this for a moment and let it sink in. There are over 3 billion people on the planet who access the internet, and of that number, two billion are actively on social media of some sort and most often on mobile devices with a social media app.
If you are looking for a solid investment, it is a good bet to consider one that has the capacity to serve that many people worldwide. Social media is huge and it is growing by the day. While not growing as explosively as it had within the past decade, it is still growing and on solid ground for the foreseeable future. It is true that some technology investments are risky but social media is going nowhere soon and although not growing as rapidly as it once had been, it is growing on an upwards curve. So, what are good investments? There are several options open to you.
Buying shares if you want to join the ranks of ‘owners’
Let’s take a look at Facebook, the world’s largest social media site for some solid data on investments. There is a reason why social media is a good investment and Facebook tells it all. Consider the recent presidential elections in the United States and how Facebook had a major impact on how voters felt about the candidates. In fact, over a month later the candidates are still the topic most shared and literally tens of thousands of groups have been set up to share heated discussions. This puts Facebook in the heart of literally every home that has a Facebook account and that gives Facebook, trading as FB, a huge amount of power. Anyone or anything with that much influence is a powerful force to be reckoned with and therefore, a safe investment.
Betting on the movement of Facebook
Do you want to actually buy shares on the market or would you rather invest in another way without a huge capital outlay? Since Facebook is forecast to continue growing, the question is how fast? One of the newer investment vehicles, CFD trading, Contract for Difference, is a way of betting on the spread so that you are only investing a very small amount of money. You literally try to predict the margin between the buy and sell price and that’s what you are betting on with your broker.
To simplify it, let’s say FB is trading at $120 per share on a given day. If you wanted to buy 100 shares you would be looking at a total cost of $12,000. At a 50 per cent margin with a traditional brokerage, that would mean an outlay of $6,000. However, when you are betting on market movement you only need to invest 5 per cent which then becomes $600. You will, in effect, be betting on the spread between what it is being sold for at the time of your ‘bet’ and at a predetermined future point on what it will be sold at. The spread is what you are betting on and a much cheaper way to break into investing in social media.
So then, social media may go through periods of losing ground as new technology is introduced, but it will grow again within a short time simply because it is a powerhouse that is going nowhere soon. Any media that holds that much influence on the market is going to be a solid investment, it’s just a matter of determining how you want to invest. Do you want to buy shares or bet on market movement? With social media, either is a good investment. The bottom line is trading style and investment capital. By weighing what you have to invest and whether you are looking for a long term (shares) investment or a short term (CFD) wager, you can invest knowing that social media is as good as it gets.
Alana Downer is the Content Marketing manager at Learn to Trade which provides financial trading training.
