Some people love cannabis, while others get their enjoyment from drinking wine or coffee. Either way, however, you have to admit that the cannabis industry has had a significant couple of years. In 2016, the cannabis sector produced $7.1 billion which filtered into the government and directly into the pockets of investors, farmers, and entrepreneurs. Plus, following the November election, a number of states are now hoping to legalize cannabis. Therefore, more and more people are starting to look for marijuana stocks to invest in.
With that said, are you looking to start marijuana investing? If so, ask yourself this; are you cunning enough to invest and receive promising returns? For example, keep in mind that it’s unlikely that you would gain $1 million in six months by investing $10. It’s much more likely that you would receive $20 in a year or two by investing $10. This, of course, leads investors to the next question in play; how does one properly invest in the cannabis sector?
Keep reading for a brief overview on how you can invest in the cannabis industry.
Marijuana Investments
By purchasing a stock in a company, you have purchased a piece of that company. This process is referred to as an equity. If you are looking for marijuana stocks to invest in, consider publicly listed and exchange-traded names. As you would with any stock in the market, you are required to obtain a brokerage account in order to buy and sell.
Generally speaking, most online brokers will allow investors to buy and sell shares that come from cannabis-related companies, but it is always recommended that you ask beforehand, just to be sure. Once you access the markets, you then have to decide how you want to make your marijuana investments.
The Cannabis Sector has Diversity
Almost every sector in the market will experience ups and downs. If you do not spend the time building knowledge on the industry that you want to invest in, you will not be able to pick the winning stocks or avoid the losing ones. This is where diversity comes into play.
If you are looking for marijuana investment companies, and you want to put all of your money into these companies, make sure that you truly believe in the direction that the industry is heading in. In fact, putting all of your money into multiple marijuana investment companies has it’s level of risk, so seek diversity in your portfolio as this will help you avoid pitfalls.
Additionally, if you’re looking for marijuana stocks to invest in, try to branch out in the world of cannabis. For instance, in the world of cannabis, there are packaging companies, retailers, grow light manufacturers and cultivators. Don’t put all your eggs in one basket!
Contrary to popular belief, it’s quite easy to diversify your portfolio. Below are a few different ways to obtain diversity when thinking about gaining exposure to the marijuana industry.
1. Seek out a diversified company: For those looking to diversify their marijuana investments, make sure you check out CannaRoyalty Corp. (CNSX:$CRZ) (FRA:$CY4) which is one of Wall Street’s favorites for a diversified company in the cannabis sector. Originally founded by Wall Street veterans, CannaRoyalty Corp. has a platform of 24 different holdings across high-quality areas in the cannabis world, such as brands, devices, research, and intellectual property.
2. Marijuana-focused mutual funds: If you are leaning more towards a managed fund approach to marijuana investing, consider taking a look at The American Growth Fund Series II (MUTF:$AMREX), which is the first (and only) marijuana-focused mutual fund. It is undeniable that these fees are high, but if you obtain a professional money manager, this is an attractive route for anyone who tends to make an investment and then forget it about it shortly after.
3. Invest in marijuana-focused exchange-traded funds: It is not yet available on the market, but for those looking to start marijuana investing, know that there is the Emerging AgroSphere ETF coming soon. This ETF is called ‘AgroSphere’ because it will be investing in the non-recreational and supply chain of the marijuana world.
The Bottom Line
As you would with any sector in the stock market, consult a financial advisor before you make your marijuana investments. This article is intended to educate prospective investors, but again, when looking for marijuana stocks to invest in, have an open and honest discussion with your financial advisor beforehand.
Featured Image: Twitter
