Looking to expand your portfolio beyond stocks and bonds into new investment opportunities?
Real estate, art, precious metals, collectibles, and other alternative investments provide an eclectic array… But which of these alternative investment opportunities is right for you?
I’m here to assist you in figuring it out. I’ll expose you to some of the top alternative investments available in this article. We’ll look at the advantages and disadvantages of each, as well as examples of alternative investments and the best platforms to utilise to get started investing right away.
1. Real Estate
Did you know that real estate accounts for 40% of the assets of the average millionaire?
These high-yielding alternative investments, however, aren’t only for millionaires. Investing in rental properties is one of the best alternative investment strategies for all types of investors.
Real estate is one of the best alternative investments since its value tends to rise over time:
According to the FHFA, the average yearly increase in home prices since 1991 has been 4.3%.
The average rate since 2000 has been 4.7%.
Unfortunately, real estate values have risen so dramatically that many investors now find it difficult to purchase property outright.
This is when Fundrise comes into play. Both accredited and non-accredited investors can invest in real estate on this crowdfunded real estate platform without the bother of buying and managing properties or making a large down payment.
You may simply invest in a portfolio of high-quality real estate assets from anywhere, at any time, using their easy and user-friendly web platform.
Furthermore, Fundrise’s performance in recent years has been quite impressive…
However, Fundrise is not the only way to invest in real estate. Yieldstreet is another option for alternative real estate options and beyond.
Accredited investors can now invest in art, commercial loans, and other assets that were previously exclusively available to institutional investors through Yieldstreet.
Yieldstreet is an excellent option for accredited individuals wishing to diversify their portfolios while potentially earning larger returns.
Art is another item that should be included on any list of alternative investments. This is due to the fact that art is a tangible item with intrinsic value that can increase over time.
Investing in art allows investors to tap into the emotional and cultural value connected with artwork, which can often outperform other investments over time.
Over the last two decades, all art has kept pace with the S&P 500, while contemporary art has outperformed both:
Of course, investing in art entails risks such as volatility in the art market and the costs connected with purchasing and preserving artwork. You need also have some knowledge of art.
If you want to use art as an alternative investment option, don’t go out and buy a Bansky right now. Instead, both accredited and non-accredited investors might look into Masterworks, a platform that allows you to purchase fractional ownership in iconic works of art.
This way, you can gain access to some of the world’s most valuable and prized artworks without spending a fortune or worrying about shipment and storage.
3. Antiques and collectibles
“Collectibles” is a catch-all phrase for a variety of alternative investments, including:
Automobiles, watches, and jewellery Coins
Wine, whisky and more…
Why are collectibles among the finest alternatives to traditional investments? Here are two examples:
Collectibles have a minimal correlation with the stock market, making them an excellent method to diversify your portfolio and lower overall risk.
According to the Knight Frank Luxury Investment Index, collectibles will exceed inflation and the bulk of conventional investment classes, including equities and even gold, in 2022:
If you want to add collectibles to your portfolio of alternative investments, one platform that stands out is Public.
The term “public” refers to both accredited and non-accredited investors. It provides a variety of investing options in collectibles such as designer handbags, comic books, and even sports memorabilia.
Public allows investors to spread their risk and potentially reap the benefits of a successful investment by providing access to a diverse range of collectibles.
4. Private Corporations
Investing in private companies is one of the most intriguing alternative investment opportunities available. These firms are frequently at the vanguard of innovation, with enormous growth and return possibilities.
However, keep in mind that investing in private companies carries inherent risks, including the risk of losing your entire investment. That is why it is critical to conduct thorough research and only invest what you can afford to lose.
However, for those willing to take the risk, investing in private companies via platforms such as Equitybee can provide exciting potential rewards.
Equitybee is a one-of-a-kind platform that connects accredited investors with private entrepreneurs seeking funding. Investors can get in on the ground floor of the next big thing by interacting with these companies.
Furthermore, Equitybee employs a rigorous screening process to ensure that only the most promising companies are accepted onto their platform.
5. Venture Capital
Venture capital investing entails placing money into early-stage companies with significant growth potential but also a high chance of failure. However, if the investment is successful, the returns can be enormous.
According to Cambridge Associates, the top quartile of venture capital funds has generated an average annual return of 15% to 27% over the last ten years, compared to the S&P 500’s 9.9% return over the same period.
Yieldstreet’s platform provides possibilities to engage in venture capital projects, giving investors access to a diverse portfolio of early-stage companies that have undergone a rigorous vetting procedure.
However, keep in mind that these potentially high-yielding alternative investments can be highly illiquid and should be considered only by those with a high risk tolerance.
Please keep in mind that most Yieldstreet products, including venture capital, are currently only available to accredited investors. Check out our Yieldstreet review for additional information.
6. Private Credit Blended Notes
Another alternative investment that is becoming increasingly popular? Direct lending funds, often known as private credit blended notes.
These are private credit loans made to non-publicly traded companies or individuals, and they are frequently used to finance real estate development, buyouts, or other business activities.
Accredited investors can use Percent to gain exposure to several notes across diverse asset classes and countries in a single transaction.
As a result, blended notes can be appealing investment instruments for fixed-income investors wishing to diversify beyond bonds quickly.
However, it is important to note that investing in private credit blended notes carries some risks, including credit and liquidity risks. Before buying, investors must thoroughly assess the underlying borrowers as well as the terms of the notes.
Billionaires like Bill Gates and Bill Malone invest in farming for a reason: it’s a largely unexplored investment opportunity that can provide a unique diversification to your portfolio.
Furthermore, investing in farmland can benefit society by promoting sustainable agriculture and contributing to the production of critical crops.
But how do you invest in farmland without spending a fortune on pristine land? AcreTrader, for example, allows authorised investors to quickly buy in rural holdings across the United States.
Investing in farmland with AcreTrader provides investors with access to a variety of farm types and locations, as well as professional management and experience.
In recent years, cryptocurrency has been a big issue in the investment world.
Investors considering crypto as an alternative investment should be aware that it is a highly volatile investment with uncertain market conditions. Consider Bitcoin, which once traded above $60,000 but now trades about $28,000.
Despite the risks, many investors are drawn to the cryptocurrency market because of the potential for high returns. One cryptocurrency investment option?
Bitcoin IRA, which allows you to invest in and hold Bitcoin and other cryptocurrencies in a tax-deferred retirement account.
However, as with all alternative investment products, do your homework before investing in this asset class.
If you don’t want to keep your cryptocurrency in an IRA, eToro, a social trading platform that allows investors to buy, sell, and trade cryptocurrencies, is another good option.
Trading CFDs with this supplier results in a loss for 81% of retail investor accounts. Before investing in these products, you should consider whether you can afford the high risk of losing your money.
9. P2P Lending
The concept of peer-to-peer (P2P) lending is straightforward. Borrowers can acquire loans directly from investors using P2P lending platforms instead of going through traditional banking institutions.
As an investor, you earn interest in exchange for borrowers receiving loans at lower interest rates than they would have received through regular channels.
Although it may appear risky, investors can typically choose which loans to invest in based on the borrower’s credit score, loan amount, and loan purpose.
LendingClub is a popular peer-to-peer lending platform that links borrowers and investors.
LendingClub has processed over $68 billion in loans and has over 3 million users since its launch in 2007.
LendingClub investors have typically achieved returns ranging from 3% to 8% per year.
P2P lending is one of the top high-yield alternative investments with returns like that.
Of course, there is a risk of default, so do your homework and thoroughly consider your investing possibilities before engaging in any P2P lending.
10. Precious Metals
During times of economic uncertainty, precious metals are regarded as a safe haven for investors. Metals have a strong tendency to preserve their value during inflationary periods and can also operate as a hedge against geopolitical dangers, making them a popular alternative investment option.
The chart below depicts the long-term performance of gold versus the S&P 500:
You’ll notice that bear markets in equities were frequently bull markets in gold prices. Another advantage of precious metals is that they are not associated with the broader stock market.
Investors can acquire exposure to these alternative investment products through exchange-traded funds (ETFs) such as the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV), as well as real bullion or coin holdings.
Precious metals can also be held in an IRA for further tax benefits.
Commodities are broad terms that cover materials such as:
Uranium and coal
Muesli and wheat
Aluminium and copper
Petroleum and natural gas
and a lot more
Commodities’ primary value proposition is that, while they’ve been rising recently, they’re still historically relatively cheap when compared to stocks:
Furthermore, with oil behemoths like Shell (NYSE: SHEL) yielding 4%+ and copper kings like Southern Copper (NYSE: SCCO) yielding 5%+, commodities are among the best high-yield alternative investments.
Individual corporations like the ones mentioned above, commodity-specific ETFs, or a broad natural resources ETF like GNR, the S&P Global Natural Resources
Final Word: Alternative Investment Ideas
Diversification is essential for minimising risk and maximising profits when it comes to investing. Alternative investments offer one-of-a-kind chances to diversify your portfolio while potentially earning substantial returns.
Some of the best alternative investments to consider are real estate, art, collectibles, private companies, venture capital, and private credit blended notes. Remember that these assets have inherent risks, including as illiquidity and value swings.
Before investing, do your homework, understand the dangers involved, and only invest what you can afford to lose.
To reduce danger, use reputable platforms such as:
These platforms, which include Fundrise (real estate), Masterworks (art), Public (collectibles), and Equitybee (private enterprises), make it easier for investors to access the best alternative investments without having to spend a lot of money to get started.
Which alternative investment is the most popular?
Market conditions, investor preferences, and laws can all influence popularity. However, according to NORC at the University of Chicago, more than one out of every ten Americans polled invests in cryptocurrencies, making cryptocurrency one of the most popular alternative investments.
What should I put my money into instead of cash?
Instead of cash, consider investing in low-risk, high-yielding alternatives such as savings accounts, money market funds, or short-term bond funds.
What is the most secure and profitable investment?
There is no such thing as a guaranteed safest and most profitable investment because all investments involve some level of risk. Diversified portfolios with a mix of stocks, bonds, and some of the best alternative assets, on the other hand, have the potential to provide a balance of safety and profitability.