What are the Best Alternative Investments to Stocks?

| April 17, 2017

alternative investmentsStock markets are known for their vicious ups and downs, you might make a buck one day, but lose more the next.

Savings rates are at historic lows and showing no real signs of going up enough to make saving worthwhile, so what is the best way to make more money from what you already have?

The sector which works best for you will depend on how much you have to play with. Naturally, where possible a diverse portfolio is best – one which blends high return but higher risk with low, guaranteed returns.

Real Estate

Over the last few decades real estate has become one of the go-to non-stock market investments; particularly for retirees. It varies from country to country, but many are now seeing those who were able to afford cheap homes in the 60s, 70s and 80s now buying up other properties to rent out as retirement funds.

 

 

Others do up dilapidated properties and auction homes to sell on for profit. So long as local construction levels remain low while demand stays high, real estate will remain a hot market. Naturally, there are some tougher markets like Detroit where housing stock far outstrips demand in a declining urban area.

Gold and Precious Metals

When stock markets fluctuate and geopolitics infringe on business, investors look for safe havens. These are investments which rarely change value.

The smart investor will always include gold and other precious metals in their portfolio as a bulwark against high risk stocks. For example, if there’s a run on a stock market the value of an investor’s stocks will go down, but as money floods into gold, its value will rise.

A small example could be seen in the first week of April when President Trump launched a missile strike on Syria. Immediately safe havens such as gold and the Japanese Yen increased in value as early investors panicked.

Those already holding gold bullion would have seen their holdings grow 0.4% to $1,248.50 per ounce.

According to Lear Capital, it is better for investors to buy actual gold bullion or rare gold coins than to invest in gold stocks (AUX). For example, during the 1987 Black October market crash, the Dow fell 41%, AUX fell 46%, but physical gold rose 18% in value.

When stocks are high, invest in physical gold, then sell the gold when stocks crash and the gold price rises. Repeat and profit.

Peer-to-Peer Lending

This form of making money outside of stocks is perhaps the most risky. Peer-to-peer lending works by unassociated lenders pooling money via a lending service.

Much like a bank making a loan, you can pick to which loanees you wish to pool your money into. They take the loan for their business and repay the debt in monthly installments with interest added on.

As one of the lenders, you get your share back in installments with the interest too, so over the long term you can make a profit. The risk comes from the fact that these loanees have been rejected by larger financial institutions previously.

Your Own Business and Yourself

Invest in yourself, your talents, and your ideas. Just like the other ideas, it comes with initial costs and no guarantee of success, however, by undertaking further training, gaining qualifications, and building a business you can earn large amounts of money.

These can range from self-improvement to offer services, offer consulting, or to make and sell products. Second businesses can offer a vital source of income and can, if done well, be converted into full-time enterprises netting large amounts of money. Alternatively, businesses can be built up and then spun off for profit.

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  1. Ravi kumar says:

    Great options suggested. Own Business and invest in yourself make more productive in future.