Grab Your Crystal Ball: 3 Ways to Make Money Predicting the Future
Ever considered using knowledge of the future for financial gain?
If you knew what would happen tomorrow, you’d certainly find ways to capitalize on that, right? (And we’re talking legal ways, people!)
Hollywood uses this plot device in lots of popular time-travel movies. In Back to the Future II, Marty is advised to “put some money on the Cubbies” after their improbable World Series win. In Frequency, a young boy in the past is told to “remember the word ‘Yahoo,’” which was a high-flying stock tip when the movie aired in 2000.
Even though you don’t have the advantage of mentors from the future whispering predictions in your ear, there are still several ways to profit from your clairvoyance.
Let’s dust off those crystal balls and dive in! Here are three ways to make money predicting the future.
1. Motif Investing: Capitalize On Market Trends
Think of Motif Investing as a selection of micro-mutual funds organized around certain economic trends or industries.
Rather than investing in a traditional mutual fund that holds hundreds of positions, you might buy a Motif with 20-30 stocks all clustered around one idea like Obamacare, Cyber Security, Climate Change, or No Glass Ceilings (female-led companies).
Motif shows you the performance history of these various “motifs,” and like traditional stock investing, you can put your money where your mouth is and invest in the trends you believe in. Trades cost $9.95.
The top-performer year-to-date? Battling Cancer, up 46.5%.
And while the thematic investing element is cool, where Motif gets interesting is that users like you and me are allowed to create our own motifs. Through their Creator Royalty Program, you can earn $1 for everyone who buys or rebalances your motif.
The platform has 100,000 active customers and is growing rapidly, so these royalty earnings have the potential to add up fast if you can build a popular and successful collection of stocks.
Among the “Community Curated Motifs” I explored, the top-performers seemed to share the common threads of capitalizing on a current market trend and a clever name, like Phanatical Pharmas II, GoPro or Go Home.
If you have access to a blog, forum or other audience of people who believe what you believe, you could recruit them to join Motif and buy into your fund, then collect the royalty.
2. Instavest: Replicate the Trades of Top Investors
Like Motif, Instavest also plays in the stock market sector but with an even simpler proposition. Instead of investing in micro-mutual funds, Instavest just shows you single stock recommendations and one person’s reasoning behind their pick.
The platform will show their actual trades, performance history, and the size of their position. This level of transparency is designed to let you replicate the trades of top investors without having to do all the research yourself, and without the expensive overhead of a traditionally managed mutual fund or brokerage.
If you believe a trader’s logic to be sound, you can buy the stock through Instavest and set it to automatically sell or re-balance whenever the Lead Investor makes their next move. Trades are just $3.49.
If you make a profit and are happy with your returns, you have the option to “tip” the Lead Investor a percentage of your gain as a “thank you” for their advice.
And naturally, this is a two-sided opportunity as well; if you’ve got a knack for picking winning stocks and can make a compelling case to convince others, you may find yourself in the Lead Investor role and earning tips as the gains materialize.
Lead Investors can make up to $5,000 per successful strategy when others piggyback, according to Instavest.
That’s not bad, considering it’s on top of what you already made from your investment!
3. PredictIt: A Crowdsourced Prediction Engine
PredictIt.org is something of a crowdsourced prediction engine where you can make money predicting future events.
Some of the current predictions on the site:
- Who will win the 2016 Presidential election?
- Will Greece exit the Euro in 2015?
- Which woman will be featured on the $10 bill?
Here’s how it works. You buy shares in the outcome you think will happen. For instance, if you think Hillary Clinton will win in 2016, you could buy shares in that outcome.
All shares are priced between $0.01 and $0.99 based on market-driven probability and everyone else’s predictions. The current “price” to bet on Clinton is $0.57 per share, and will almost certainly fluctuate over time.
If you buy a share of Clinton’s presidential election at $0.57, you have several options. If things are looking good for her in the primaries, the value of that share (based on market demand from the rest of the PredictIt crowd) could increase to $0.67. In that case, you could sell your share for a $0.10 profit.
Alternatively, you can wait until the election actually happens. If your prediction comes true and Clinton wins, your share is now worth $1.00, earning you a $0.43 profit. In these types of zero-sum games, your profit is funded by everyone who predicted Clinton would lose… That’s the beauty of crowdsourcing!
PredictIt earns money by charging a 10% fee on your profit.
Ready to pull out the Magic 8-Ball and start profiting from predicting the future?
Your Turn: Would you try any of these futuristic strategies for making money?
Nick Loper helps people earn money outside of their day job. He's an author, online entrepreneur, and life-long student in the game of business. His latest role is as Chief Side Hustler at SideHustleNation.com, a growing community and resource for aspiring and part-time entrepreneurs.