If you’re thinking of investing your money, you’ve probably had a lot of people tell you to invest it in the stock market. However, the stock market isn’t the only option when it comes to investing. There are plenty of alternative investments out there depending on your level of risk. Below are a few alternative investment ideas that you may want to consider.
While a lot of people may still be wary about investing in the real estate market after the 2008 crash, the low prices make real estate a decent investment opportunity. The best ways to get involved in the real estate market are to buy rental properties as an individual owner, to buy shares in a real estate investment trust, or to join a real estate investment group or to buy distressed properties. If you find the right tenants and manage your properties correctly, investing in real estate can provide a decent return on your money.
Investing in private equity means investing money in a private company that does not have public stock. You would contribute money to a company and receive returns once the company reaches a certain stage (which is usually when the company decides to go public). While investing in private equity can be risky, especially if the company fails, the success of a company can definitely pay off in a big way if they are able to survive.
Certificate of Deposit
Certificate of Deposits (or CDs) are a low risk investment that almost anyone can get involved with. CDs are similar to savings accounts, except that the interest rate is higher and you cannot touch the money for a set period. While current yields and interest rates aren’t very high at the moment, investing in a CD is still a good idea because you are guaranteed to get a return and it’s one of the more financially secure investment options.
Peer to Peer Lending
With peer-to-peer lending, you lend money to individual borrowers at a specific interest rate. There are a number of different peer-to-peer lending companies. While there’s always an issue with people defaulting on the money you lend them, one of the benefits of peer-to-peer lending is that you can diversify your investment portfolio and lend in increments as small as $25.
You’ve probably heard more than one person talk about buying expensive pieces of fine art. While some people buy as collectors or art enthusiasts, there are a number of people who purchase fine art as an investment. While investing in fine art doesn’t cancel out traditional investment assets or options, it’s definitely an alternative if you’re looking for something to diversify your financial portfolio. When it comes to fine art, the art market can be risky, but it can also lead to a large financial return.
Hedge funds collect money from various different investors and pool the communal capital into different investments in order to increase the chances of a return on an investment. Hedge funds are less regulated than other investment methods which allows for investments to be made in a variety of different ways. Such a broad approach can often yield high, positive returns. Additionally, while someone who manages a hedge fund can invest in stocks or other derivatives or commodities, there have been reform acts put in place to provide more transparency about how hedge fund managers are making investments.
Venture capital funds are a type of private equity that focuses on investing in the early stages of start-up businesses. Venture capital funds and firms provide the initial money for these start-ups and gain a return once the company issues stock or is purchased by another company. While this type of investment can be risky and may not provide a return for several years, the returns can sometimes be quite high.
Investing in commodities means investing in large-scale resources such as fossil fuels (oil or coal) or precious metals (copper or gold). The commodities market is extremely volatile and unpredictable, but many of these markets tend to climb after their unstable years and provide high returns. A good way to get involved in commodity investment is to become part of an exchange trade fund.
(Photo courtesy of Diana Parkhouse)