Where Should You Invest?

The Neopian National Bank

This is the most basic way to invest, and it counts as an investment because you're making neopoints just by having them, not by doing anything. Not to mention that almost everyone takes this approach, so it is a good thing to check and compare with other investments.

First of all, you should probably know one fact, that once you upgrade to a certain bank account, and you withdraw, you don't need to downgrade it. It will remain at that amount. For example, my account is at Ultimate Riches! which needs a minimum of 10 million neopoints to upgrade to, but right now I have only about a million in my account. I still get the 12.5% interest rate and my account is still Ultimate Riches!, regardless of whether I have zero or twenty million neopoints. I've seen some people who seem to think that it doesn't work like that, so I think it is good to remove that misconception.

Secondly, you get your interest as a per day basis, not as a per year basis. So while your yearly rate might be some amount, the actual interest you'll earn in one year is slightly higher since the neopoints you'll add each day are compounded. You can calculate this interest rate by dividing the interest rate by 365 (normal number of days in a year) and using the compound interest formula. I'll spare you the calculations though by listing them:

• Junior Saver lists 4.5% and actually gives 4.6% over the year.
• Neopian Student lists 5.5% and actually gives 5.65% over the year.
• Bronze Saver lists 6% and actually gives 6.18% over the year.
• Silver Saver lists 6.5% and actually gives 6.715% over the year.
• Super Gold Plus lists 7% and actually gives 7.25% over the year.
• Platinum Extra lists 7.5% and actually gives 7.79% over the year.
• Double Platinum lists 8% and actually gives 8.33% over the year.
• Triple Platinum lists 8.5% and actually gives 8.87% over the year.
• Diamond Deposit lists 9% and actually gives 9.42% over the year.
• Diamond Deposit Plus lists 9.5% and actually gives 9.97% over the year.
• Diamond Deposit Gold lists 10% and actually gives 10.52% over the year.
• Millionaire Platinum lists 10.5% and actually gives 11.07% over the year.
• Millionaire Double Platinum lists 11% and actually gives 11.63% over the year.
• Millionaire Mega-Platinum lists 11.5% and actually gives 12.19% over the year.
• Neopian Mega-Riches lists 12% and actually gives out 12.74% over the year.
• Ultimate Riches! lists 12.5% and actually gives out 13.31% over the year.

Now, I'd just like to say that most of the actual rates are rounded up, and also since interest tends to be rounded up anyway there is a small error there. Not to mention if you have the Battleground Boon, it kicks up interest for a week. Plus, this whole thing assumes you neither deposit nor withdraw neopoints and collect it every single day, something I think no one really does in practice.

But, I think that 13.31% number we get from Ultimate Riches! is a good idea of the limit of what the bank can get you. Now of course, we also have to take into account the fact that the bank is the safest investment on Neopia. Carrying neopoints on hand is risky due to random events and doesn't really earn you anything, but the neopoints in your bank are always safe. And that interest rate is always guaranteed, even if it is a bit low.

Another thing to remember is that you can take neopoints out of the bank anytime that you want. So if you want to buy something like your pets got sick or you suddenly saw something that might make a good investment, it's a good idea to have your neopoints in the bank.

So, to sum it up, the bank has a low interest rate, no risk, and the highest liquidity there is of any investment.

Stock Market

The stock market counts as investing because you're buying stocks and selling them later for a higher price.

A lot of people stay away from the stock market because they don't understand it, but it is simple enough for me to almost explain it in one paragraph. Buy 1,000 shares of a stock at 15 neopoints each, and only 15 unless you have an Obelisk Boon letting you buy for only 10, and then sell it later.

That's it. I would even call the stock market a risk free investment because there is no way to lose neopoints unless you sell stocks for lower than they are later. The only thing is that it takes a huge amount of patience, after all, it could take months for the price to finally go up. Also, stocks have gone bankrupt before, which means you lose everything invested, but that's so rare it is almost not worth thinking about. People say you should diversify your stocks in case one does crash, but if you buy at 15 np a share every day, your portfolio will be diversified anyway.

Now, the thing is while it can give you a nice return depending on how long you're willing to wait, it requires daily investing. Also, it is hard to get your neopoints back from the stocks if you need them urgently. I made the mistake recently of having almost no neopoints in my bank, but I spent all that I had and invested it in the stocks.

Now, it's true that you get a much better return on investment from the stocks than the bank. It really depends on how much long you want to wait, but before when I had just started I'd sell them when they reached 30 np a share, a 100% profit compared to a maximum of 13.31% from the bank. Even if it takes five months to sell, and most did sell in that time, it was still worth it. I now sell at 50 np, a 150% profit, though it takes more time.

And that's the thing, it takes a huge amount of time. And the stocks are probably the most illiquid investment that you can have. While you can make a profit on a stock, what generally happens is that your portfolio as a whole is in the negative. That's not a problem at all. But, let's say that you need those neopoints for some reason, like say you just saw something that you could snipe in the auctions or you're sure the price of something is going to go up. Converting stocks into actual neopoints is going to be hard and you'll probably face a loss. Not to mention that if you sell out your entire portfolio, it is probably going to take a huge amount of time to get it back to what it was, since you can only buy 1000 shares a day.

So, remember, if you're investing in the stock market, it is likely that you won't see those neopoints again for a long time. So, I realized my mistake of keeping nothing in the bank and having close to two million neopoints in the stocks. You always want to keep some amount in the bank, say, one million neopoints, in case of emergency purchases or the scenarios I described above.

So, in conclusion stocks can provide a relatively high rate of return, have little to no risk, but take a long time to turn into a profit and are probably the most illiquid of investments in all of Neopia.

Food Club

I consider Food Club to be an investment since you buy bets at a price and then cash in later, though I suppose some people might disagree, but I still think it is an investment since you're really making neopoints just by having neopoints (to bet). Note that I don't include other gambling games like slots because like I've written about in a previous article, it is only the Food Club which can guarantee a profit over the long run.

I won't go into the details of Food Club right here, but I will mention that you can usually average a profit of 60-80% on what you invest, or sometimes higher. Let's take a flat 75% average rate though.

Now, the problem is that you can only bet so much a day depending on your account's age (50 + 2*days you've been playing Neopets). Let's say that you're a newbie, so you can only bet 50 np for one bet and for ten 500 np. A rate of 75% gives you a profit of 37.5 neopoints, but let's round that up to 38. That is practically worthless. Remember, you don't need to only look at profit percentages, but what you're actually making when you invest. I know some people who bought things for 1 neopoint and sold for 2 neopoints in their shop. Sure, that's a profit of 100% but it is essentially a waste of time. You could make much more by playing games.

So, Food Club is really good for older players. My account can currently bet 3880 a bet or 38,880 a day for a usual profit, of let's say around 29,000 a day. Someone twice as old as me could make double, an average of nearly 60,000 in profit when they bet. That sounds pretty good considering all it takes is a few clicks. So how old do you have to be before it becomes worthwhile doing? Well, if your account is one year old, you can start making around 5,000 neopoints when you bet, which I guess isn't that bad.

As for liquidity, you can not take back your bets until the day is over. So, the neopoints are basically gone. Also, while there is no risk in the long run, there is a risk that what you bet for one day might end up becoming worthless. So if that is all you have, and you need it, you might want to rethink betting. That shouldn't happen to you though if you remember to keep some reserve for emergencies.

So, in conclusion, the Food Club provides a decent return with almost no risk and nice liquidity, but it favors those with older accounts by a large margin.

Item Investing

This is the last area that we're going to cover. This is probably a topic where you could write on and on about, but basically it is about buying a certain item like a book and selling later for a higher price.

Now, one problem with this is the high risk. Sure, you could make a lot of neopoints, but your items could just as well become worthless. Liquidity mainly depends on what types of items you're investing in.

Also, the rate of return can be very high as well. If you bought a Pirate Draik Egg for when they were selling for 5 million neopoints and sold a year later for 15 million neopoints, well, that was an excellent choice. But say you held on to it for a bit longer, and then TNT started the Forgotten Shore and then it fell to 1.7 million. That's quite a bit of a loss.

One thing I have to say as there seems to be a deflationary spiral currently seizing Neopia, lots of people have found their investments have become worthless. Before, with inflation getting higher and higher, investing was a good idea but it doesn't seem to be that profitable anymore.

As a matter of fact, in this article I'm not going to provide any information on what I think is a good investment, rather I'd just like to point out a few flaws in what people currently see as good investments.

For one, people always assume stamps will go up, since they think supply will go down eventually. But that doesn't always happen, the Obelisk War Stamp is now worth much less than it was a year ago. People generally inflate an item artificially since everyone goes and hops on the inflation train. Another thing, plot prizes also increase over time, but they usually sell for the most the moment that they are released and stabilize later on, and the price can take years to go up. I'd suggest if you want to invest, sell your plot prize in the initial release, and when the price stabilizes buy it for less.

Right now, I'd be slightly wary of this since some things can be re-released (like the Shooting Star Muffin. We all thought that was going to go up forever but then it was released in the Battledome) but there are ways to make a profit. I would say to do your research before you try this route though, and also remember that this can take even a longer time than stocks, so those neopoints are essentially gone for quite some time.

So, to sum it up, investing in items is high risk, with the potential for high reward, and liquidity depending on the item (expensive paint brushes still sell faster than expensive books) and can take a very long time to sell.

And that's that. Those are the main ways that you can invest your neopoints, and they all have their pros and cons. It's really up to you to decide which one is for you, but I would definitely encourage trying out all of them. After all, diversity is a key to wise investing, and I wouldn't put all my eggs into one basket. (Except for perhaps the bank, where it is absolutely guaranteed to be safe, but won't really make that much so putting everything in the bank really isn't that good of an idea.)

I'd like to thank Jellyneo for the information on the bank accounts.