Alternative investments available are definitely worth considering today.
When you think of investing, what do you think of? Stocks and shares are probably the first two things that instantly spring to mind. We are bombarded every day with the media talking about stocks, whether it be the latest boom or a headline crash. With this in mind, it is easy to miss other investment opportunities.
A key strategy for building wealth in this modern internet age is by diversifying your investments. To help get you started, this guide will explain 6 interesting alternative investments you might not have thought of.
What are Alternative Investments?
You may not have heard the term “alternative investments” before. Simply put, it is a term that is used to describe investments that fall outside of the stock market.
Alternative investments include investing in things like art or wine. It could also mean investing in innovative financial ideas such as cryptocurrency. There is usually less risk exposure for alternative investments as they are not bound to traditional investments. By diversifying your investment portfolio in this manner, the risk to you is reduced.
Deciding what to invest in does require some careful thought and planning on your part. This is because putting your money into non-traditional investments can sometimes be trickier. For example, if you invest in art you must have some knowledge as to whether a piece of art will increase in value over time or not.
Whatever investment you go for, always make sure to do your due diligence beforehand as even though the risks are lower, there are still some risks involved.
The great news for investors is that thanks to advancements in technology, it has never been easier to invest. There are also many amazing investment opportunities available that simply weren’t an option decades ago. In a moment, you can learn about 6 interesting alternative investments. Before that, why should you consider alternative investments?
Why Choose Alternative Investments over Traditional Investments?
In 2018 alternative investment experts Preqin released a report that advised the alternative investments industry will be worth an incredible $14 trillion by 2023. I’m sure we would all love to get some of that money!
Apart from the potential to make extra money, what else makes alternative investing a good idea?
The simple answer is alternative investing diversifies your investment portfolio and has a low asset correlation. This means your risk is reduced. Over recent years there have been numerous events affecting traditional investments. Alternatives are not immune, but they do have greater insulation against major economic shocks and can often remain steady or even continue increasing when times are hard.
There has never been a better and easier time to diversify your investment portfolio. If you choose the right platform for you, then you could not only reduce your risk but see significant returns in the future.
6 Interesting Alternative Investments
Now that you know more about why alternative investments can be a good investment, here are 6 investment ideas you should consider:
For thousands of years, humans have enjoyed a nice glass of wine. The global wine market is expected to be worth more than a staggering $429 billion by 2023. A truly incredible amount of money!
There are two ways to make money from investing in wine. The first is to buy a bottle (or bottles) of wine and resell them when their value has appreciated. For many, this may not be practical as you need suitable storage for the wine. Plus, unless you are an expert, you can’t guarantee a bottle you have chosen will go up in value.
If you know a lot about wine and have adequate storage for it, then this might be a way for you to make money investing in wine or you could add it to your list of easy side hustles. Just buy one or two bottles and let them appreciate, then sell quickly in a year or two!
A simpler way to invest in wine is to do it through wine fund investing. This is more appealing for many as you don’t need to know a lot about wine and you don’t need to worry about storing bottles of wine safely for years at a time. Investing in a wine fund allows your investment to grow and you can enjoy a good return each year.
Increasingly people are choosing to diversify their portfolio by investing in cryptocurrency. The boom is in large part thanks to the much-publicized success of Bitcoin with one Bitcoin currently worth more than $35,000!
A key reason investors are turning to alternative investments like cryptocurrency is that they are not affected by interest rates. Historic low-interest rates mean traditional currency such as the dollar is worthless. Bitcoin and other cryptocurrencies are not linked to interest rates so are not affected as much in the event of an economic downturn.
Cryptocurrency is a growing market with many big-name brands getting involved. Due to it being entirely digital geographical restrictions don’t hamper trade in cryptocurrency. The marketplace is truly global which means investors have a much better chance of getting a return on their investment.
If you like free money hacks (and who doesn’t!), then look for some free crypto on sites like Coinbase. They offer small amounts in exchange for watching videos about certain cryptocurrencies. This can be a great way to build your knowledge about crypto and start your funds for free!
Peer-to-Peer (P2P) lending is a simple way of diversifying a portfolio whilst making a good return on your investment. You can get started with as little as $1000 spread across multiple loans. This means you can dip your toe in the market without too much exposure. As your confidence and returns grow, then you can always invest more.
Although interest rates are low right now, P2P can provide amazing returns of up to 11% annually. Investments can be shared across a mix of low and high-risk borrowers. By spreading the risk, you can still benefit from greater returns from the higher risk pool but protect part of your investment by keeping it in the low-risk pool.
The P2P market is expected to be worth a whopping $558.9 billion by 2027. Although there is still risk involved the possible rewards make P2P investing worthwhile. Plus, there are many great platforms using the latest technology that make it easier than ever before to start investing.
Owning Your Own Business
One way to diversify your investment portfolio is by investing in yourself and starting your own business. A successful business grown over time can provide a regular income that can be used to invest in growing the business further or gives you more money to add to other investments.
Many businesses can be started for truly little money or in some cases cost nothing at all to start! The internet has revolutionized the opportunity for starting your own business. There are endless possibilities such as blogging, teaching, and software development to name a few ideas. Start by thinking about your own skills and experience, then work out from there what business you could start today.
There are many easy side hustles that could turn into a full-time income. Starting small means you can keep your regular job, still invest money elsewhere, and grow your own business. Doing it this way means there is less risk for you, but you can still enjoy the extra money you are making.
An alternative to owning your own business is to invest in others. Many startup companies offer shares in their company in exchange for your investment via equity crowdfunding.
The way this works is that you invest your money in the startup via the equity crowdfunding website. If the company is successful, then you can make a profit on your investment either through dividends or selling your shares for a profit. Like all investments there is a risk involved, if the company fails you could lose all your investment.
Getting started in equity crowdfunding has never been easier. There are plenty of online options to choose from and most allow you to invest starting with just a few hundred dollars.
It is entirely possible to earn up to 26% return on your investment if the company is successful. For example, you start with an investment of $20,000 at a return of 26%. After 20 years you would have $3,626,000! Not a bad return on your investment.
Real estate is another popular alternative investment. According to Dale Jackson from BNN Bloomberg, “housing is still the best investment for most Canadians”. You can earn a healthy return either through market appreciation or forced appreciation.
Of course, even though we are investing in the hopes of getting a positive return, we need to make sure that we can afford the real estate that we want to buy. This is when a mortgage calculator can come in handy. By simply entering some numbers, you can quickly understand whether you can afford the monthly payments on the real estate you want to invest in.
These 6 alternative investments are great ways of diversifying your portfolio. All investments carry an element of risk. Therefore, it is essential that you do your due diligence prior to investing. You must be careful not to fall into any of the common investing pitfalls.
Be prepared to have to wait to see returns and always ask for help from a qualified professional if you are unsure.
Getting started on investments has never been simpler due to the sheer range of options provided by the internet and linked mobile apps. Be careful not to rush into anything and watch out for scams.
If you follow this advice and have a clear investment strategy that you stick too, then you will enjoy the rewards in your later years. Early retirement, traveling the world, and security for future generations of your family is all possible if you make the right investments now.
If you enjoyed this blog post or my content in general, feel free to send a lovely coffee my way, or sign up for my newsletter for regular updates!