If you’re considering purchasing domain names for investment (either in the form of new registrations, or on the secondary resale market), it’s important to focus on how you’re actually going to make money from your portfolio of domains.
Without a clear, up-front vision of the “path to liquidity” for your domain investments, it’s better to stay out of the investment side of the business entirely. Remember, a domain name that is gathering virtual dust (i.e. that’s not generating traffic or sales inquiries) is worth nothing at all. In fact, it has a negative value since you’ll be required to pay a renewal fee every year to maintain the registration.
On the other hand, if you can find ways to generate revenue from a domain name even while you’re waiting to unlock much greater value from it through sales or leasing transactions, you’re in a much stronger position. As long as a domain name pays for its own upkeep over the course of a year, there’s nothing, in theory, to stop you from holding on to it indefinitely.
Before getting into the monetization of domain names, let’s look at some of the other risks inherent in domain name investments and how it adds up to the type of risks people take when investing in stocks.