15 Absolutely Safe Alternative Investments with Great ROI

You’re probably familiar with stocks and bonds when it comes to alternative investments, but there are a plethora of options available outside of these conventional asset types.

Investors can further diversify their holdings and chase returns that are less connected with the stock market by pursuing alternative assets, which range from hedge funds and private equity to venture capital and rare antiques.

What is an Alternative Investment?

Anything other than cash, stocks, and bonds can be invested in as an alternative investment. Tangible goods like wine or precious metals can be invested in as alternative investments. Furthermore, these may involve financial assets like hedge funds, distressed securities, and private equity.

In general, there is little association between alternative investments and traditional investments (bonds, equities). Furthermore, certain alternative assets are quite illiquid and have very complex valuations. For these reasons, high net worth people and financial institutions choose specific sorts of alternative investments.

An investor’s portfolio may benefit greatly from the inclusion of alternative assets. Compared to typical investing, many alternative investments offer returns that are noticeably higher. Furthermore, notwithstanding an investor’s risk tolerance or market assumptions, alternative investments are a feasible option due to their wide variety of availability.

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Which Alternative Investments Are the Best?

The greatest alternative investments are ones that fit your total risk tolerance, satisfy your financial demands, and reach or beyond your investing goals.

Always remember to conduct due diligence before to making a financial commitment to one investment over another.

Having said that, the following list of 15 alternative investments can boost your net worth:

#1. Investment Trusts for Private Real Estate (REITs)

Among the most well-liked alternative investments is investing in private REITs.

You invest your money in real estate investment trusts (REITs) and are relieved of any grunt work (like collecting rent).

The following is what REITs may allow you to collect:

• Unexpected revenue
• Gains from selling a REIT

REITs can help you diversify your portfolio and generate consistent passive income, just like other alternative investments.

Investing in private REITs can yield larger potential returns compared to public REITs.

#2. Small Enterprises

I’ve always found investing in small businesses to be appealing.

especially since a start-up’s potential for profit is always unknown.

Check out Mainvest if you agree that sounds fun.

The newest FinTech platform to make it possible for almost anyone to support local company startups and invest in the community is Mainvest.

Among the business kinds are:

• Breweries

• Eateries

• Coffee shops

• Dispensaries

Here, there’s just one central idea:

You won’t be able to access companies that are primarily focused on software development, while Mainvest concentrates on physical storefronts.

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The following are some reasons to think about funding small company startups:

• The act of diversification

• Make money passively

• Assist nearby communities

And all it takes to get started investing is $100.

To my knowledge, Mainvest is the only alternative investing site that doesn’t impose any fees on its users.

There are two ways to make money with Mainvest:

• The company may reimburse you for all of your initial outlay.
• You can benefit passively from the business’s (potential) earnings.

The amount of profit you make is determined by your upfront investment and the terms of your contract with that specific business.

The fact that you are the owner of the precious metals is one of the main advantages of purchasing them with OneGold.

Furthermore, OneGold offers storage as well as insurance for your precious metals.

#3. Excellent Wine

A wonderful alternative investment is fine wine if you’re wanting to:

Spread out your holdings.

Boost your wealth

Defend against rising prices.

Guard against fluctuations in the stock market.

Thus, you might want to look into Vinovest if you appreciate earning money from some of the top alternative investments and you have a taste for fine wine.

#4. Precious Metals

Especially in hard economic times, precious metals are excellent alternative investments to diversify your portfolio.

And because of recent technological developments, you may now safely purchase precious metals right from your phone!

OneGold is among the best sites to invest in precious metals.

You can purchase, sell, and redeem any of your investments in precious metals with OneGold around-the-clock.

The fact that you are the owner of the precious metals is one of the main advantages of purchasing them with OneGold.

Furthermore, OneGold offers storage as well as insurance for your precious metals.

A recent FinTech software called Vinovest bills itself as the first wine robo-advisor in history.

The correlation would be 1.0 if fine wine and the stock market moved in the same direction, that is, when the market rises, good wine rises as well.

On a scale of 0 to 1.0, the connection between good wine and the S&P 500 is 0.12, according to the above graphic.

Thus, investing in stocks and excellent wine are essentially the reverse.

#5. The Cryptocurrency

Purchasing cryptocurrency has the potential to be a very successful alternative investing strategy.

One of the most well-known cryptocurrencies, Bitcoin, really achieved an investment return of 302.8% in 2020.

Having said that, cryptocurrencies like Bitcoin are extremely erratic.

#6. Loaning Amongst Peers

Another really cool method to diversify your portfolio and maybe get passive income is through peer-to-peer (P2P) lending!
That being said, cryptocurrencies like Bitcoin are incredibly erratic.

Recall that the individuals you are lending money to could not have the best credit, so there’s a chance you won’t get your money back.
But, there is a chance of losing everything, just like with most alternative investments.

That is only the objective of the game.

Nonetheless, with about 26% of Americans utilizing P2P lending services, P2P investment is growing in popularity. You are not investing in assets if you are a P2P investor.

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#7. Refinancing a Mortgage

While real estate certainly fit the description of alternative investments, your home isn’t precisely a risky one.

The real estate market is tremendous, particularly in 2021, and it is probably going to keep getting better in the years to come.

Some strategies for making home improvements are:

Fresh roof

freshly installed windows

Better-quality garden

Fresh air conditioning system

Refinancing your mortgage is another possible method to reduce your housing costs.

Refinancing typically results in cost savings because it lowers your mortgage interest rate.

In 2020, when mortgage rates were very low, I utilized the following advice to convince myself that it was justified to refinance my own house:

• Your loan rate drops by more than 0.50 percent.

• After refinancing, you don’t intend to move within five years.

• You pay very little in fees (usually no more than 2% of your existing mortgage).

• Refinancing made sense for me in this case, and I was able to save $120 a month ($1,440 annually) by doing so.

How am I going to spend the $1,440 that I “saved”?

I’m going to invest every last penny of that!

#8. Be Your Real Self

The best return on investment, in my opinion, will come from investing in your education and yourself.

Having a good education is essential to your success.

Although it may sound gloomy, I believe this to be true.

In the event that we stopped developing, learning, and thriving, what else would we do?

Without a doubt, we wouldn’t succeed.

I don’t always mean to say that learning occurs in a classroom.

Actually, I firmly think that the best teacher is experience.

Udemy is among the greatest sites for continuing your skill development.

The following are available on the internet platform Udemy:

• Sixty-five languages

• Seventy Thousand Teachers

• Forty million students

In order to achieve financial success and lead the life you desire, begin learning new skills right now.

#9. Have Your Own Enterprise

Starting and growing your own company or side gig is one of the best “alternative investments” you can make.

Creating your own company is arguably one of the most important:

• Nervous

• Rich

• Incentives

Actions that you can take in life.

I can attest to the difficulty—I’ve spent the last twelve months developing my personal finance site. In any case.

Building your own company, however, is probably your best chance of becoming a millionaire if you really want to get wealthy.

Actually, owners of businesses make up 66% of millionaires.

The good news is that starting a business doesn’t require spending thousands of dollars.

It’s true that there are many ways to be a business owner, earn a lot of money, and spend very little operating capital.

Alternative investments

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#10. Crowdfunding for Real Estate

One of the more well-liked alternative investments is crowdfunding for real estate.

With real estate crowdfunding, you are essentially the “bank,” lending money to people in return for interest payments and, ideally, a return on your initial investment.

You can begin investing in real estate projects with GROUNDFLOOR for as little as $10.

If you invest with GROUNDFLOOR, your funds will probably be allocated to the following kinds of projects:

• Turning over

• Remodeling

• Fresh Building

Even though real estate crowdfunding transactions are extremely illiquid and hazardous, you could still enjoy respectable average returns on your investment of up to 10.5%.

#11. Fine Arts

You might want to check at fine arts as a distinctive alternative investment.

86% of money advisors advise investing in art, according to a recent survey.

The following explains why regular investors are thinking about investing in great art:

• Outperform the stock market

• Guard against rising prices.

• Protect yourself from recessions.

#12. Agricultural Land

Land is an asset that has a very high potential rate of return on investment.

Particularly, agricultural land.

Basic principles of supply and demand are responsible for the rising value of land:

The need to live on land is growing as a result of the growing population.

The supply of land declines because it cannot be generated.
A high demand and a low supply will inevitably result in a higher value.

#13. Classic Sports Memorabilia

If you’ve always enjoyed collecting items, such as sports cards or sneakers, you might want to think about making an investment in recognizable sports memorabilia.

In the past, there has been a lot of profit potential, and you might get money doing something you could find enjoyable!

Alternative investments

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If you think this concept would work well for you, visit Collectable.

Consider this platform as the meeting point of your passion and financial gain.

Among the collectibles are:

• Sports cards

• Autographed keepsakes

• Shoes worn by well-known celebrities

• Famous stars’ sports jerseys

#14. Investments in the Private Market

Were you aware that you could profit from investing in alternative, private market securities such as:

• Exquisite art

• Cryptocurrency funds

• Finance for legal matters

• Maritime finance

• Real estate for business

• Investments in the supply chain

Check out Yieldstreet if you think it sounds enjoyable.

Yieldstreet is a non-accredited and accredited investors’ alternative investment platform.

If you’re an accredited investor, you can fund international cargo ships as well as unique ventures like exclusive dining establishments.

#15. Rental Assets

Have you ever had dreams about making money from rental properties in the past?

If so, you will adore this substitute investment.

Access Arrived Residences

Arrived Homes is a FinTech platform that transforms real estate investing for almost everyone, for as little as $100 to get started.

Arrived Homes takes care of all your dirty work:

• Investigate the tenants

• Examine the rental homes.

• They take care of household maintenance.

• They get paid the rent on time.

Choosing a rental property to invest in, purchasing shares in it, and then relaxing to generate passive income are the only steps involved.

Characteristics of Alternative Investments

The following characteristics set almost all alternative investments apart from more conventional investment types:

Minimal Relationship to Alternative Investments

Potential investors may find this to be quite advantageous as it offers options for portfolio diversification due to the low correlation.

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Tough to Ascertain the Fundamental Worth

When it comes to valuation, alternative investments are frequently intrinsically difficult. Certain specialized knowledge may be needed for the appraisal of an alternative investment, and demand patterns for some exotic assets, like fine art, may be erratic. They might also be distinctive, which makes the assessment much more difficult.

Comparatively Little Liquidity

When compared to traditional investments, alternative investments typically have lower liquidity. The lack of organized markets and the lower demand for specific assets compared to typical investments (consider modern art pieces) can both be used as explanations for the low liquidity. Furthermore, certain investments include limitations on how one might withdraw from the investment.

High Cost of Purchase

High purchase expenses are usually linked to alternative investments. Certain alternative investments, like hedge funds, include fees and/or a minimum investment amount.

Alternative investments

Groupings of Different Alternative Investments

There are two types of alternative investments: physical and immaterial.

These are some examples of tangible alternative investments:

• Jeweled materials

• Beautiful art

• Alcohol

• Postmarks

• Vintage Items

Intangible alternative investment examples are as follows:

• Hedge funds

• Exclusive ownership

• Venture capital

• Inverses

• The cryptocurrency

Alternative Investment Risks

Absence of rules. Since not all alternative assets are SEC-registered, they are not subject to regulations. They are nevertheless subject to the Dodd-Frank Act’s regulations, so the SEC may examine their operations.

Insufficient clarity. There are few or no public regulatory filings for most alternatives since they are not subject to SEC regulation. As a result, investors are left with little information.

Low liquidity. It could be challenging to purchase or sell these investments because a lot of alternatives are not listed on stock exchanges. A lot of hedge funds and private equity funds have lockups, which bind investors to an investment period during which they cannot be redeemed.

Difficult to assign a value to. Determining the worth of alternative investments might be difficult if there is no market price for them.

Evaluations are more susceptible to subjectivity and might differ significantly depending on the appraiser.

High amounts to invest. The minimum investment requirements for alternatives can be unreasonably high because they are not designed with the typical investor in mind.

Higher dangers. High returns have the potential to come with significant risk. Risky tactics like short selling and trading sophisticated derivatives may be a part of many alternative investment strategies.

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How to Invest in Alternative Assets

Investing in unconventional assets comes with more obstacles than traditional asset types. The risk is proportionate to the potential for higher returns and more diversity, notwithstanding the allure. You will need to conduct a thorough investigation and due diligence if you are thinking about making alternative investments.

There may be restrictions on access to alternative assets for people who aren’t accredited investors. Though many are expensive, there are a lot of exchange-traded funds (ETFs) and mutual funds for alternative investments available today.

Consider the Global Listed Private Equity ETF (PSP) offered by Invesco. Investing in well-known private equity funds is what this ETF does. The fund isn’t inexpensive, with an expense ratio of 1.44%, but you have to pay that if you’re not an authorized investor in order to be exposed to this type of alternative asset strategy.

For unaccredited investors, these publicly traded funds may be safer options because they are governed and registered with the SEC. You can find available funds and ETFs with the aid of sources like Morningstar, but collaborating closely with a financial advisor who can recommend the best options to meet your objectives is the ideal method to invest in alternatives.

Alternative investments

Strategies for Alternative Investments

Developing a plan to close the greatest investment agreements is essential. The data and information on assets are accessible due to the widespread availability of traditional investment options. It gets easier to formulate classic investment ideas that work as a result.

Conversely, relatively little information is made public for alternative investments, which only allow accredited investors to purchase the securities and assets. As a result, fund managers are responsible for developing alternative investing strategies. They stay informed and continue to research both recent and historical market patterns.

• A few factors need to be carefully considered when developing methods to cope with alternative funds:

• These investments are not governed by the Securities and Exchange Commission (SEC) of the United States.

• They are difficult to sell or turn into cash since they have a low liquidity rate.

• They have a lower market correlation. It indicates that prices do not follow the market’s direction of movement. These are, to put it briefly, less erratic investments.

What Makes Alternative Investments Beneficial?

While stock market investing is undoubtedly appealing, recent market turbulence may have scared off some investors, leading them to switch to alternative investment platforms.

Approximately 65% of adult Americans put money into alternative investing.

More than 4 out of 10 Americans (44%) favor alternative investment products for the purpose of diversity, which is one of the key reasons why American investors are shifting to alternative asset classes.

FAQs on Alternative Investments

References

• corporatefinanceintitude.com

• forbes.com

• wallstreetmojo.com

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