When most people think about investing, stock investments are the first thing they recall. And I don’t blame them. It’s familiar, it’s talked about in the media constantly, and apps have made it easy as can be to get started. But did you know that the world of investing is so much bigger than just stocks and bonds?
Let us steer off the well-beaten path for a moment and delve into some of the less popular, yet often very exciting alternatives that also exist. These are the types of investments that can inject diversity, security, and even a little excitement into your portfolio, especially during uncertain times when people just can’t make sense of where to invest. Let’s start by talking about what they are.
In simple terms, alternative investments are anything outside of traditional stocks, bonds, or cash. They’re often used to broaden your portfolio and can sometimes offer higher returns than their conventional counterparts—but usually come with a bit more risk.
The number of such investments is quite large. Let’s dive right into some examples.
Real Estate
Real estate has long been a go-to sector for investors who want something solid – literally. Buying property can offer some steady income, potential appreciation, and some nice tax benefits on top of it. But nowadays, it’s about more than just becoming a landlord.
There are platforms now that let you invest in real estate without having to own a single building. Think real estate investment trusts (REITs) or crowdfunding platforms where your money is pooled with others to fund large-scale projects.
If you love to take things into your own hands, you can also look at the option of flipping real estate. House flipping involves purchasing undervalued properties, fixing them up to build their value, and selling them at a markup.
Real estate investment can protect your funds against inflation, and it is a great way to earn passive income if you plan properly.
Private Equity and Venture Capital
Ever dreamt of being an early investor in the next big thing? Such as the next Netflix or Shopify? That’s the allure of private equity and venture capital. These are investments in startups or private companies that aren’t listed on the stock market. They’re high-risk, high-reward – and not everyone has what it takes to jump in just like that, as they often require a big upfront investment and a long-time horizon (a minimum of 5 years). But if you’ve got the capital and the patience, you could be carrying the tip of the next Earth-molding breakthrough.
Global Finance Magazine reports that over 900 billion in insurance liabilities have been transacted since the 2008 crisis.
Investing in Precious Metals
Navigating the currents of economic uncertainty often leads individuals towards the perceived haven of valuable elements, elements like gold and uranium. In periods marked by heightened market flux, a notable inclination among investors emerges, directing capital towards assets like gold and silver as anchors of steadiness. Its inherent physicality, enduring worth across temporal spans, and capacity to buffer investment collections against the erosive effects of monetary devaluation contribute to this perception.
Engagement with these commodities can manifest through direct ownership of corporeal forms or via participation in exchange-traded funds designed to mirror their price movements. Regardless of the avenue you choose to go with, these assets introduce an element of reassurance into one's overarching financial strategy. The Global Treasurer recently announced that gold has hit an all-tight high of USD 3,384/ounce.
Peer-to-Peer Lending
Imagine acting as the bank and lending money directly to individuals or small businesses. That’s the idea behind peer-to-peer (P2P) lending platforms. You earn interest on the money you lend out.
It’s a way to generate income, and many platforms let you diversify across multiple borrowers to spread out the risk. Just keep in mind that default risk is real. But if done wisely, it’s a unique way to grow your wealth and also a regular source of income. On top of that, there are a lot of innovative projects going on nowadays substantially mitigating that risk. One such project is 8lends by Maclear, which entails putting up collateral in the event that a borrower defaults.
Cryptocurrencies
This has been a long debate, but now there is no denying that cryptocurrency is here to stay – for now, at least. Bitcoin, and altcoins like Monero and Dogecoin have created a whole new asset class. Some people swear by them as the future of money. Others see them as highly speculative. Either way, they’re volatile, unregulated in many places, and come with a steep learning curve.
But for those willing to dive deep and put their learning caps on, this form of investment can offer a unique kind of exposure that traditional investments can’t measure up to. Ensure that you’re constantly learning more, investing in safer coins such as Bitcoin and Ethereum if you are a beginner, and choosing a reliable platform to invest on.
Art, Wine, and Collectibles
Here’s where things get a little bit fun. Alternative investments can also include rare wines, vintage cars, fine art, action figures, and even comic books. These “passion assets” combine investment potential with personal enjoyment. If you’re into it and know your stuff, collecting can turn into a very profitable hobby.
The risk associated with this type of investment is that what you may consider a high value asset may not always be what the market considers high value. And sometimes, selling collectibles quickly at your desired price can be difficult.
The good thing is that they often don’t move in sync with the stock market, which is great for diversification.
Best Practices for Alternative Investments
So, feeling confident about alternative investments? We are too! But before you start buying gold bars, vintage cars, or shares in an animal farm, here are a few golden rules to keep your journey profitable and smooth:
1. Educate yourself on the investment avenue you choose
Alternative investments are not always straightforward. Some require in-depth knowledge (like art valuation), while others move fast (like crypto). So, before you put any money down, make sure you fully understand:
What you’re investing in
How it works
The risks involved
How and when you might see returns
If you can't explain it to a friend over coffee, it's worth learning more before committing.
2. Diversify like a pro
Think of your investments like a buffet. You don’t want to load your entire plate with just one dish. Even within alternative investing, spread things out – maybe a little real estate here, some passion projects there, and a dash of crypto if you’re feeling bold. It helps protect you from losses if one area underperforms.
3. Set clear goals
Ask yourself:
Why am I investing in this?
Is it for long-term growth?
Is it for passive income? A passion project?
When you’re clear on your goals, it’s easier to choose the right path – and stick to it when things get bumpy.
4. Watch out for scams and hype
Alternative investments can attract some shady characters. If something sounds too good to be true (guaranteed 30% or more monthly returns), it probably is. Stick with credible platforms, double-check sources, and don’t be afraid to ask questions – or walk away.
5. Don’t bet the farm
High rewards often come with high risk. It is okay to take calculated risks, but never invest money you can’t afford to lose – especially in speculative areas like crypto or start ups.
Excitement is good. Recklessness? Not so much.
6. Stay curious, stay updated
The alternative investing landscape is always evolving. New platforms, tools, and asset types pop up all the time. Keep learning; there are a lot of resources online to help your journey.
Adding even one or two alternative investments to your portfolio can open up a whole new world of possibilities. Just be thoughtful, take your time, and remember – it’s your money, your journey. Make it count.
So, Why Consider Alternative Investments?
Because they offer something traditional assets can’t: new sources of income, reduce your exposure to market swings, and let you invest in things you’re genuinely passionate about.
That said, not all alternative investments are created equal. Some require more capital. Others demand more knowledge. And most carry different kinds of risks.
But if you decide to build a more resilient, exciting, and personalized portfolio, it might be time to look beyond the usual suspects and explore the many possibilities alternative investments have to offer. Crowd lending is one of the more lucrative of these, such as projects like 8lends.
If you’re interested in a high-tech lucrative investment opportunity with your risk mitigated with collateral, sign up to get started on 8lends today.
