High Risk vs. Low Risk Investments/Flips
And the importance of knowing which is which...
NOTE: While I am using the term 'investment' throughout this article, the concepts in this article are entirely applicable to 'quick flips' as well.
Much like the stock market, your portfolio of toys will likely include both high and low risk investments. Your ratio of high risk to low risk purchases is personal preference — what really matters is being able to tell the difference between them.
Since 'risk' is a bit of a sliding scale and relative to the person partaking in the risk, I need to define what each phrase means to me so we're on the same page.
To me, a high risk toy investment is a toy that will lose me MONEY if it doesn't go according to plan.
But that isn't the definitive definition for everyone. Some people may consider something high risk if there's a chance the hold time could increase to longer than expected. Or someone could consider a product high risk if it takes a ton of prep time but doesn't have high ROI. Whatever the case may be, you need to be able to define what you consider high risk so you can identify products that fall into that category.
Here is an example of a current toy that I consider a high risk investment:
