There are plenty of great alternative investments out there – meaning you don’t have to go down the conventional route. Here are some good ideas.
1. Peer-to-Peer Lending
One of the newest ways of lending is peer-to-peer lending. There are online services that provide loans to businesses, but they also offer personal loans and many other types of loans. If you qualify for the loan, then you’ll be provided funds by people who are like you. You join a pool of people who are able and willing to loan money to other people.
No banks are involved and other investors’ money are pooled together. The loan is made to those asking for funds. One of the best things about this is you’ll receive rates that are higher than most places, and many people reap returns in the double digits. Each month you’ll receive payment and this will include any interest that is owed to you.
There is a certain level of risk though, such as these are people who will likely not have qualified for a loan from a bank. They may not have been able to go through other traditional outlets either. However, you can view the prospective borrower’s credit rating before you make a decision.
2. Real Estate
When it comes to investing in real estate, you can become a landlord by buying and owning property, which can include houses, condos and duplexes to name a few. You collect rent from tenants and the returns can be huge, because you won’t have to pay to purchase the property in full. Instead, you come up with a down payment and the bank will finance everything else, but you will get appreciation from your property and rental income.
You can form a partnership with other people or do it alone. Going in with others can spread your risk. Not only that, but they may bring knowledge to the table and help you learn more about real estate.
Before you buy a piece of property, make sure you realistically are certain you can become a landlord. Being a landlord comes with many headaches and stresses, and accidents can and will happen and of course people will fall behind their rent. However, you can make things easier on yourself by using a property management company, but they do charge money. It can be a great one of many alternative investments.
3. Gold
One of the best things about gold is its resistance against inflation. This is why many investors call it a safe investment and it is the strongest competitor to investing in stocks. It actually has a lower correlation with stocks and other assets, and when times get tough investors are usually glad they have their money in gold or some of their money.
There are a number of ways to invest in gold, such as buying physical pieces of gold such as bars, coins or investing in gold accounts or via gold mining stocks, options and futures. If you’re a small time investor, then your best bet is to try to directly invest in gold. Try to allocate at least 5-10 percent of your portfolio to gold, but do be aware that various things can cause the price of gold to go up or down.
4. Start Your Own Business
Another thing you can do is launch your own business. This is often the best way to generate the highest returns possible. Sure, you can fail and lose everything, but it may be worth pursuing.
Many companies grow and produce steady, decent income over time. Consider where you can excel or what kind of shop you’re like to run. Just make sure you have the startup capital to launch your business.
You can put some of your cash into a business and invest the other half of your money into something else, or you can create a part-time business. Do it on the weekends and/or evenings, which will allow you to keep your regular job. Best of all, you’ll bring in some extra money on a regular basis.
There’s always a risk that a business can fail. The original owner might not be able to pay you regularly either. Whatever you do, you want to hire an attorney to help protect you if the other owner defaults.
5. Equity Crowdfunding
Maybe you have no interest in running your own business, but you might still want to be a part of business, which is why you should consider equity crowdfunding. Startup companies need access to funding, so they offer shares of their business. If you buy some shares, then you’ll make a return if the company succeeds.
However, the big risk is you lose your cash if the company fails, but there have been a number of success stories. One includes Cruise Automation, which produces technology for self-driving vehicles and most of their developments was funded via equity crowdfunding. The company was then purchased by General Motors, which produced profits for investors. This led to the rise of the crowdfunding industry.