Investing is usually thought of as something that happens on paper. You buy a stock, watch the number go up or down, and then sell. That’s great, it’s simple, and it works. However, it’s more fun when you can find interesting ways to invest—especially when you’re investing in a much more physical asset you can see and touch in the real world.
“Dual-use” is a term I’m stealing from the nuclear world. A “dual-use technology” is something that can be used for both benign purposes (like clean nuclear energy) but can also bring a country or power a few steps closer to having a nuclear weapon. The classic example of this is centrifuges enriching uranium. A country (e.g. Iran) says they want centrifuges to have nuclear energy. Meanwhile, its opposition (e.g. the US) says no, you want to build a nuke.
I’m talking about a much more innocent term, but the underlying idea has some similarities: invest in something you expect to grow in value over time, but you also get to use it in the short term.
I talk about four examples here (real estate, cryptocurrency, fine art, buying a private jet) just to pique your interest and flesh out the idea, but once you learn to see this style of investing, you’ll find there are hundreds of ways you can invest in this style.
Your Primary Residence
The classic example of this is your home. When you own a house, the value of that house is likely to rise over time. You also get to live in it while its value rises.
Now, of course, it’s not a completely passive investment. You still need to do occasional repairs on your house and manage its upkeep. But factoring in the mortgage, insurance, HOA, taxes, and automated cost of upkeep (e.g. paying landscapers) this should still be a perfectly fine investment. If the value of your home is not growing faster than the annualized cost of ownership, then it’s not a worthwhile investment as an asset. You may love it and want to keep it, and that’s perfectly fine. But just don’t treat it like an asset, because it’s a liability at that point.
The next most common example is a second home, usually a vacation home. Not everyone can afford these, obviously, and you’re much more likely to buy an actual house before getting a vacation home. However, it is technically possible to do this.
For example, let’s say you live in an expensive city like NYC, pay rent for a cheap-ish apartment because you don’t care about having a posh place, and then buy a vacation home in North Carolina to use every few months and otherwise rent out to Airbnb guests.
Assuming you plan on moving to North Carolina anyway, this would be a top-notch plan. But even if you only ever want to use it as a vacation home and not a primary residence, it still may not be a bad idea. After all, you have an asset that’s growing over time, while also bringing in income (assuming your rental income will surpass costs of management).
Now you have an asset that has value growing over time, bringing in income, and also providing you with a great vacation opportunity.
Farmland & Rural Property
The much less sexy version of a vacation home is rural property or farmland. Maybe some of y’all think it’s sexy, in which case, you’ll love this.
Owning farmland is good for three reasons: available space, independence & sustainability, and tax advantages.
Available space. I love Miami Beach. It’s a beautiful strip of land with lots of activity, neon lights, and the inexorable sea. However, you will never have a backyard or wide-open sky there. The only person who could afford to was Versace, and it sadly didn’t last long for him.
On a farm, you can build a mansion for yourself, your kids (like many farmers do), and have plenty of quiet besides. It’s a niche lifestyle, and definitely not for everyone—but it’s not a terrible secondary kind of property to have.
Independence & sustainability. I don’t mean “sustainable” in an environmentalist way, but more the survival way. Some people buy acres of rural property, not for farming, but as a recreational hunting ground. Combine that with a thriving, well-tended garden, and you have a beautiful location to last for quite a while.
I’m not saying this is a likely scenario, but during the beginning of the pandemic in 2020, there were major concerns about supply chain durability—specifically around the rush to grocery stores and the inability of meatpacking plants to stay open. With your own rural property, you have room to manage your own food that you couldn’t in an urban environment.
Tax advantages. Bruce Springsteen is a farmer. No, really! He has a piece of property in rural New Jersey, and he paid just $104 in property tax on 7.1 acres of land. How? Because he raised honeybees on it.
There are many subsidies and tax breaks available for farmers. One friend in high school told me his family-owned farmland they never once farmed in the last 20 years, yet they received a subsidy from the government for the land. The subsidy payment was an incentive to not farm the land so that food prices in the US don’t crash.
I hate the agricultural subsidy system so much. It reeks of corruption and entitlement spending. Any farmer I’ve discussed it with hates this statement because they don’t want to associate themselves with the welfare state (surprise, you’re a recipient of it). As much as it grates me, as long as they’re giving away your tax money for free, it’s wise to take full legal advantage of the system and get some of your own money back.
If you already own farmland, and you’re paying significant taxes, start doing research immediately or simply hire a knowledgeable lawyer for an hour. The return on that hour of time could be worth thousands.
I own some bitcoin and I plan to buy more (at the time of writing, 1 BTC is worth $48,164.20 USD). Almost everyone who owns some bitcoin bought it from someone else—there aren’t many miners. That’s because mining bitcoin is energy-intensive so it’s typically done in places where energy and mining equipment is cheap (e.g. China).
For the sake of brevity, I’m not going to explain how mining works just yet. That will be a separate post. But for now, we’ll say it involves using a computer’s graphics card to run a program over and over again. Your average laptop will not have a graphics card powerful enough to do this in an efficient way, so most people build custom computers to mine.
These computers aren’t ones with a screen you would think of—rather, it looks more like a giant block of electronic boards, parts, and fans. It’s not terribly complicated to put together, it just takes a bit of research.
I include it on this list because while crypto mining is supposed to be a passive form of income, you also end up with computer parts. If it ever got too expensive to mine, you could use those same parts to build a high-end computer suitable for gaming, video editing, and processing, or other graphically intensive uses.
This should be a backup plan, because these computers are expensive to build (like $1500+ USD). That said, if telling yourself you can build a gaming computer with the parts will mentally allow you to actually buy and build a crypto mining rig, go for it—that’s why I included it on this list.
Note: these days, people aren’t mining Bitcoin except with super-specialized equipment. So this example only really applies to “altcoins” like Ethereum.
Buying Fine Art
I love art. I love art partly because I love history, and the Renaissance is one of my favorite periods. While I don’t see myself ever becoming a great painter or sculptor, but I sure can appreciate fine work when I see it.
Moreover, I am lucky enough to have a few friends who are artists themselves. I commissioned one of them to paint me something that I plan to pass down in my family for years.
While I don’t plan on ever giving up my painting because of the sentimental value, I very well may commission more paintings from the same artist. If I sold those other paintings, especially as my friend’s art matures and the value of her works appreciate, then paintings I already hold will grow in value.
And the entire time, I’ve had my home filled with beautiful art enriching my life. It’s a win-win.
Buying a Private Jet (yes, this is really possible)
Alright, this one is just for fun. I do not own a private jet. HOWEVER, I heard about this idea from a 19-year-old* (!) who was pursuing this himself. He himself was not rich—he just had massive chutzpah.
Context: a lot of airlines have their own branches that deal with private jet charters. Some of them also partner through smaller, separate companies like Wheels Up. The idea is private jet owners can lease their planes to these companies, and the companies then use them in one single chartered flight (typically by rich folks or executives). The jet owner earns income from this.
While the language on the new site isn’t clear, Delta Airlines’ partnership program used to offer aircraft owners a free monthly flight in addition to their rental income. Pilots and servicing were provided by the airline, and the flight had to be within a certain radius (e.g. you were going halfway across the country, not halfway around the world). Still, as far as it goes, it’s a totally baller idea to own a private jet, take monthly rides on it, and be making money from it.
So how could a 19-year-old afford to do this, and what are the risks? He had a pilot’s license (so yes, his family must’ve been rich) which means he was familiar with the industry. When it comes to regular maintenance, the airline was supposed to take care of that. However, you still need insurance for everything else. Rust is one thing that he mentioned he had a mechanic look over in a prospective vehicle because, for some reason, it wasn’t clearly covered in the insurance policy he was taking out.
He also arranged his loan and purchase of the vehicle on contingencies of being able to lease it to the airline. Essentially, he made a deal where the airline wanted a private jet to charter, so he agreed to lend them one. So then he could get a loan and buy a jet using the airline’s promise of actually using it. It’s very ballsy because if something in the fine print goes wrong, you could be on the hook for over a million dollars, easily.
Do not attempt this without a lawyer glued to your side. But if you have the will, this is probably the coolest investment you could ever make. When I did some napkin math on it, it netted out to a possible 14% return. That is no guarantee. In the world of rich people, they never tell you anything upfront, because rich people know that information is leverage. So don’t take my 14% as gospel. It’s supposed to be a starting point for your own research.
*back then. At time of writing, he’s probably now a 25-year-old.
What’s life without fun? Not a life worth living.
Be wise in your investments. But man, if you’re not having fun every now and then, then what are you ultimately investing for?
A little creativity can go a long way. Odds are, you have a very niche interest you could make an investment in with great appreciation potential that can also give you immense pleasure in the short term, too (e.g. rare books, high-end guitars, an ancient gold chess set, etc.).
Don’t dump your whole portfolio into a fun YOLO (as tempting as it is). But please, have a little fun.