What makes an investment, an investment? An investment is an asset that you spend money/time on, which eventually earns you more money. This asset we are talking about is your domain name. And the goal is to earn a return from your domain name, without burning much of your time, resources and money.
In short, we want to reduce uncertainties like:
- Will I be able to sell my domain name eventually
- Do I have enough cash to sustain my domain name investments in the short term and long term
The overview of this series will reveal how to cut losses and increase your earnings when investing in domain names.
Let’s picture this. Logen just bought 10 domain names that he intends to resell. However, there is a risk that he will not be able to sell it at a profit. How does he reduce his uncertainty of not being able to cover the $10 cost price of each domain name.
To reduce this uncertainty, two things can be done. First, increase the demand of your domain names by appreciating their value. Second, ensure that you have a constant inflow of cash to support at least part of your cash outflow.
Appreciating The Value of Your Domain Names
The first point of appreciating the value of one’s domain name is straightforward. Part 2 of this series will deal with how to appreciate domain name value.
Receiving Cash Inflows to Support Cash Outflows
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However, for the second point, it warrants a bit of explanation. What does having an inflow of cash to support outflow of cash mean?
For instance, Logen’s investment on 10 domain names will cost $100 per year for renewal. If he intends to hold it for several years, you can only imagine the costs incurred for every year. If he has a steady stream of cash inflow of $50, his cost of investment will be reduced to $50 per year.
Domain Name Renewal Cost – Inflow of Cash = Net Outflow
$100 – $50 = $50 of outflow per year
That’s all for the overview. The second part of the series will teach you how to appreciate the value of your domain name. And the third part will teach you more about cash inflow.