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Investors are always looking for the next company that has the opportunity to generate significant returns. The stock market is a wealth-generation machine, but recent volatility has investors looking for other places to invest their money.
One of the favorites among millionaires – real estate. Research from Morgan Stanley shows that 77 percent of multimillionaire investors have some form of real estate investment.
But is real estate really the best alternative investment?
Follow this guide to learn the best alternative investments and how they can help you start your journey to financial freedom.
1. Real estate
Knowing that real estate is popular with multi-million dollar investors should give you a good idea of how well the industry has fared. Many outspoken, reputable investors have publicly expressed their support for real estate investing.
There are several ways to invest in real estate, including:
- physical possession
- REITs
- crowdfunding
Owning physical real estate can be an excellent way to see your investment grow. However, some capital is required in advance. Renting rooms is always an option to ease the financial burden, with services like Airbnb.
Real Estate Investment Trusts (REITs) are a great way to increase your exposure to real estate while also determining which market you want to invest in. You can invest in single family homes, office space in Manhattan or a data center in California.
Crowdfunding is another option that gives you the opportunity to capitalize on 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 losses incurred during stock market corrections. The most popular precious metals that investors typically buy are:
When it comes to investing in gold, you have several options. First, you can always buy physical gold in the form of coins, bars, and rounds. If you are interested in more information on buying precious metals in physical form, see the link.
You can also buy gold ETFs that track the movement and price of gold, such as B. the SPDR Gold Trust (GLD). Investing in gold mining stocks is another option – these companies are engaged in the exploration and mining of precious metals. Be aware when investing in these types of stocks that you are exposed to the price of gold and management decisions.
Investing in silver involves almost the same process as gold, except you are exposed to the price of silver instead.
3. Cryptocurrency
The cryptocurrency’s rise to fame happened in 2017 when Bitcoin’s price skyrocketed on its way to an all-time high of $19,783. Mind you, earlier in the year the price of bitcoin was hovering around $1,000.
Since bitcoin’s massive gain, other cryptocurrencies have followed suit, not to the same extent as bitcoin but still generating significant returns. The largest and most popular cryptocurrencies besides Bitcoin include:
- ether
- ripple
- Bitcoin cash
- And Litecoin
Investors should note that cryptocurrencies are extremely volatile and prices can change quickly. If you are looking to invest in cryptocurrencies, make sure you do your due diligence and understand what you are investing in.
4. SPACs
A Special Purpose Acquisition Company or SPAC is formed to raise money to purchase an existing business. For example, Draftkings, an online sports betting company, merged with Diamond Eagle Acquisition Corporation and SBTech to form the SPAC, known by the ticker symbol DKNG.
SPAC’s are not necessarily a new idea. They’ve been around since around 2007 but have recently attracted the attention of big-name investors. Also, when investing in a SPAC, make sure you do your due diligence and uncover what the business is really about. Many investors lost money when a research report came out accusing Nikola Motors of cheating.
5. Fine Arts
Looking for investments other than stocks? Buying artworks can add value to your portfolio as they tend to appreciate in value over time.
The rarer a work of art is, the more valuable it becomes and the more the price increases over time. The art market is difficult to understand because investors hold the artwork for years before selling it again.
The art market also fluctuates, so it’s important to do some research beforehand to determine which investment is best for you.
6. Venture Capital/Startups
Venture capitalists are also on everyone’s lips this year. What venture capitalists do is fund startup companies that show promising growth potential.
Businesses and entrepreneurs will seek out venture capitalists to fund their business and keep them from running out of money. Investors research the company, determine whether or not it’s the right thing to do, and then usually allocate funds in exchange for ownership.
Of course, with every startup there is a risk that it will never become profitable or that the idea will not resonate with consumers. On the other hand, venture capitalists can gain local exposure to some of the most innovative companies that can generate significant returns.
7. Collectibles
You may or may not have already started a collection – in any case, they can make excellent investments. As with art, the rarer the collectible, the more it will be worth in the long run. Popular collectibles include:
- Vintage fashion
- antiques
- Star Wars memorabilia
- Popular toy
- coins
- stamps
- board games
- comic books
- sports cards
- sports memorabilia
- movie posters
- video games
As you can see, collectibles are not exclusive. However, if you have a particular hobby, you might be able to turn it into an investment that can make you money over time.
Alternative Investments: Going Beyond the Basics
If you want to build wealth, investing has historically been the way to do it. As the stock market looks increasingly volatile, investors are looking for alternative investments. These types of investments can generate significant returns over time if used wisely.
If you are serious about investing and want to learn more about alternative investments, read the rest of our blog!
