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Investors are always looking for that next venture that has the possibility of producing significant returns. The stock market is a wealth-generating machine, but recent volatility has investors looking for other places to put their money.
One of the favorites among millionaires – real estate. Research from Morgan Stanley reveals 77 percent of millionaire investors are invested in real estate in some capacity.
But, is real estate really the best alternative investment?
Follow along this guide to learn the best alternative investments and how they can get you started on the path towards financial freedom.
1. Real Estate
Knowing that real estate is a favorite among millionaire investors should give you a good idea of how well the industry has performed. Many outspoken, well-respected investors have come out and publicly voiced their support for real estate investing.
There are several options when it comes to investing in real estate, including:
- Physical ownership
- REITs
- Crowdfunding
Owning physical properties can be an excellent way to watch your investment grow. However, it also takes quite a bit of capital upfront. Renting rooms is always an option to lessen the financial burden, with services like Airbnb.
Real estate investment trusts (REITs) are great for increasing your exposure to real estate while having the ability to determine which market you would like to invest in. You can invest in single-family homes, office space in Manhattan, or a data center in California.
Crowdfunding is another option, giving you the ability to leverage your position and set yourself up for more significant returns.
2. Precious Metals
Buying precious metals can be a great way to diversify your portfolio and minimize the losses incurred during stock market corrections. The most popular precious metals investors typically buy are:
When it comes to investing in gold, you have several options available to you. First, you can always buy physical gold in the form of coins, bars, and rounds. If you’re interested in more information on buying precious metals in its physical form, check out the link.
You can also buy gold ETFs that track gold’s movement and price, such as the SPDR gold trust (GLD). Investing in gold mining stocks is another option – these companies are engaged in exploring and mining precious metals. Be aware when investing in these types of stocks, you are exposed to the price of gold and management decisions.
Investing in silver involves nearly the same process you would with gold, except you will be exposed to the price of silver instead.
3. Cryptocurrency
Cryptocurrency’s rise to fame happened in 2017 when bitcoin’s price went through the roof, on its way to an all-time high price of $19,783. Mind you, earlier that year, the price of bitcoin was hovering around $1,000.
Since bitcoin’s massive price gain, other cryptocurrencies have followed suit, not to the extent that bitcoin had, but still generating significant returns. The largest and most popular cryptocurrencies, other than bitcoin, include:
- Etherium
- Ripple
- Bitcoin cash
- And Litecoin
Investors should take note that cryptocurrencies are extremely volatile and can change prices rapidly. If you are looking to invest in cryptocurrencies, make sure you do your due diligence and understand what you are investing in.
4. SPAC’s
A Special Purpose Acquisition Company, or SPAC, is created to raise money to purchase an existing company. For example, Draftkings, an online sports betting company, merged with Diamond Eagle Acquisition Corporation and SBTech to form the SPAC that goes by the ticker symbol DKNG.
SPAC’s are not necessarily a new idea. They have been around since around 2007 but have recently caught the attention of big-name investors. When investing in a SPAC, again, be sure you are doing your due diligence and uncovering what the company is really about. Many investors lost money when a research report came out accusing Nikola Motors of fraud.
5. Fine Art
Looking for investments other than stocks? Purchasing fine art can boost your portfolio, as they tend to appreciate over time.
The rarer a piece of art is, the more valuable it will be, and the more the price will appreciate over time. The fine art market is a tricky one to figure out, with investors holding the art pieces for years at a time before selling again.
The fine art market also fluctuates, so it’s important to do your research beforehand to determine what investment is best for you.
6. Venture Capital/Startups
Venture capitalists are also the talk of the town this year. What venture capitalists do is provide financing to startup companies that show promising growth potential.
Companies and entrepreneurs will seek venture capitalists to help fund their business to prevent running out of cash. Investors will research the company, determine if it is the right fit or not, and then provide funds typically in exchange for ownership.
Of course, with any startup, you will run into the risk of it never becoming profitable, or maybe the idea doesn’t resonate with consumers. On the other hand, venture capitalists can get in on the ground level of some of the most innovative companies that can produce significant returns.
7. Collectibles
Maybe you already have a collection started, maybe not – either way, they can make for excellent investments. Just like with art, the rarer the collectible, the more it will be worth in the long run. Popular collectible items include:
- Vintage fashion
- Antiques
- Star Wars memorabilia
- Popular toys
- Coins
- Stamps
- Board games
- Comic books
- Sportscards
- Sports memorabilia
- Movie posters
- Video games
As you can see, collectibles are not exclusive. But, if you have a particular hobby, you might be able to leverage it into an investment that can generate money over time.
Alternative Investments: Going Beyond the Basics
If you are looking to build wealth, investing has historically been the way to do it. With the stock market looking more and more volatile, investors are looking for alternative investments. These types of investments can produce substantial returns over time if you are smart with them.
If you are serious about investing and would like to learn more about alternative investments, check out the rest of our blog!
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