Diversifying your money by investing in alternative investments is a great way to diversify it.
When you invest your money, you will usually start by investing in traditional markets like the stock exchange.
You may want to diversify further your money at a later date if you are generating more.
Should everyone look at alternative investments? You should be familiar with the terms and options available.
You’ll find out what alternative investments are and why they could be a great choice for you. Also, you’ll discover what types of alternatives investments there are.
Table of Contents
Alternative Investments: What are they?
List of Alternative Investments – The Top Seven
Considerations for Alternative Investments
Alternative Investments Are a Good Investment
What is Alternative Investment?
You can skip this section if you are already familiar with alternative investments. If this is a new term to you, then you should read this section.
Alternative investments are anything that you cannot invest in through a traditional 401k or stock market. Stocks, bonds and cash are not considered alternative investments.
Many people, as their income increases and they earn more money, are looking for alternative ways to invest besides the stock exchange. This is a great way for you to diversify and avoid the volatile markets.
As with all investments, you should be careful how much money you invest in alternative investment.
Diversify your investments and start small, just as you would when investing in stocks and bonds.
What are the best alternatives to traditional investments?
Alternative Investments
List of Alternative Investments – The Top Seven
This post may be titled “12 Best Alternative Investments”, but I would consider these seven to be the most common and popular options. The next section will briefly discuss the options that aren’t as popular or common.
- Physical Real Estate
Investing in real estate is the most popular alternative investment. The aim is to rent out or sell the property to generate income.
It can be intimidating and time consuming to understand exactly what you’re doing. Real estate investing has made many millionaires.
The Millionaire Property Investor is a book I would recommend to anyone interested in real estate investment, even if I had no prior experience.
- Real Estate Crowdfunding
Diversifying your money through a crowdfunding platform is another option to invest in real estate.
The options that have been popularized over the past few years allow you to own property without having to fix or physically own it.
You may need to be accredited to access some platforms, but not all. There are many platforms to choose from. Here are three.
DiversyFund: DiversyFund allows you to invest as little as $500 in commercial real estate fund. The only platform that does not charge any fees! Sign up and learn more here.
Groundfloor – Groundfloor is an investment platform that allows anyone to invest in single-family homes (real estate) for as little as $10. This is a good way to try out the market. One of my favorites. Join now and receive $10 off your first investment.
Fundrise – Fundrise is a new investment platform that allows anyone to invest in real estate and access its historically consistent and exceptional returns. There are different funds depending on your investment strategy.
Peerstreet is for accredited investors only. You can create your own portfolio or let PeerStreet do it for you.
- Fine Art
Art investing has been around for a while, but it can be difficult to get started.
Originally, to buy well-known artwork, you’d need millions, or take a chance on newcomers, hoping they catch on, or become an accredited investor, and pool your money into an arts fund.
Why should you invest in art? According to the Wall Street Journal, art outperformed gold, real estate and classic cars as well as the S&P 500.
There is another option if investing in fine arts does not appeal to you.
Masterworks, the first fine art investment platform, allows investors to buy shares (or interests) in a painting in the same way they purchase shares of public companies.
- Peer-to-Peer Lending
Peer-to-peer lending (also known as P2P) is another alternative investment. This investment allows you loan money to someone else.
There are platforms where you can do that and earn returns on your investment. LendingClub, Prosper and others are examples.
These platforms connect borrowers directly with investors. No need to visit a bank.
The average return is between 4 and 8 percent, depending on the type of loan you choose and the risks that you are willing to take. It could be an excellent place to diversify and test your investments.
- Your Own Online Business
Start your own online business. Investing in yourself is one of the best investments you can make.
There is no guarantee that your business will be successful. If you are entrepreneurial, you can reap the rewards for many years.
You can start low-cost online businesses by creating an ecommerce store on Shopify, starting a weblog, becoming a freelance writer, or consulting.
Consider your interests, current skills, and the potential to make money on a particular market.
Are you interested in starting a Shopify-based business? It’s much easier than you might think. Start your free trial and discover more.
Commodities
Commodities are economic goods or services. When it comes to commodities, you will be looking at precious metals like gold, silver and platinum.
Other commodities include corn, soybeans and wheat as well as cocoa, coffee and sugar.
You can buy these products in physical form or as ETFs on your investment platform.
If commodities are more your thing, The Motley Fool offers some great information.
- Cryptocurrency
Cryptocurrency is something I have never discussed on this website before. However, it belongs to the top alternative investments. Although I haven’t bought into the hype myself, that doesn’t mean it has no value.
Bitcoin, Ripple, Liteocoin, Ethereum, etc. All digital currencies that have dominated the media in the past 2-3 years. The hype may have slowed, but it is still very much alive.
There are currently no regulations and volatility is high, but I see this improving over the next few years. If you decide to go down this path, be careful.
You can read more about Coinbase to learn how you can invest in any cryptocurrency.
Alternative Investments You Should Consider
The seven best alternatives to investing are listed above. If you’re interested in learning more, I have included five other options that may interest you.
I have limited information on this subject. If you are considering any of these options, do some research first!
- Tax Liens
The municipality where the property is located may sell the tax lien, which gives it the right to seize the property if the owner does not pay the taxes.
Investors can purchase liens at auction by paying the taxes due and receiving a refund plus interest from the property owner.
If you’re interested in these, there are a number of resources online.
- Farmland
This is a specialization that shouldn’t be lumped in with real estate. I have never thought of investing in farmland but it could be a great alternative investment.
Investors can profit from land values increasing or by renting out the property. AcreTrader is a platform which makes it easier to do.
- You can also find out more about the following:
Another option is to invest in jewelry. This is not a simple decision. When it comes to jewelry, you need to be aware of the market.
This article is for you if it interests you.
- Storage Units
You could also consider investing in storage units as an alternative to real estate.
Storage units are a great option for those who don’t know what to do with real estate, or have trouble dealing with renters, maintenance and other issues.
This article discusses the benefits of investing in storage units.
- Stamps
You might wonder how this is still relevant. It is relevant if you buy stamps other than those that are collected by people as a hobby.
You can find a wealth of information on stamp investing. Here is an article from Forbes that analyzes stamp investments.
You can decide if stamps are a better alternative.
Alternative Investments Are a Good Investment
You should always be aware of the risks and rewards when you invest money. Alternative investments are no different.
Alternative investments have many benefits, including diversifying your money.
Cash flows or tax advantages could be sheltered.
Stock marks or other places that protect against volatility
Access to assets with higher returns
There are also challenges associated with these investments:
Tax consequences that could be negative
Some individuals can be more volatile than others
Most are in illiquid assets, which make it difficult to price and exit them on a regular schedule.
You decide, but always remember to do your research. Never put all of your money into one investment. As you become more familiar with investing, start slowly and gradually increase your investment.
Alternative investments are growing, and it is easier than ever to invest in different assets. This does not mean that you should be reckless when exploring opportunities.