The popularity of alternative investments is rapidly growing. Investing in bonds and stocks is an excellent way to build wealth over time. But when it comes to diversifying your portfolio, alternative investments provide a much-needed boost.
Here’s a short guide explaining seven alternative investing ideas to kickstart your journey:
Real Estate
Real estate is one of the most common alternative investment vehicles. You’ve got a ton of options. You can own a rental property, invest in commercial real estate, industrial real estate, and more.
In recent years, real estate investment trusts (REITs) have gained significant traction. These are companies that own, operate, or finance income-producing properties, such as apartment complexes. As an individual investor, you can gain positions in real estate assets without buying property directly.
REITs are similar to mutual funds in that investors can purchase shares or units and earn income through dividends.
Commodities
It might sound unreal, but you can invest in physical, raw products and earn returns. Some examples include agricultural products, such as:
- Oil
- Wheat
- Rice
- Meat
You can even invest in precious metals, such as:
- Gold
- Silver
- Copper
That said, most investors participate in commodity investing using futures contracts, index funds, and exchange-traded funds (ETFs).
Private Equity
Private equity is another option for alternative investing. It means purchasing ownership stakes in companies not listed on a public stock exchange.
Keep in mind that private equity investing carries greater risks than investing in public stocks. But there is always potential for high long-term returns. Trade alternative investments with SoFi to get your account run by experienced portfolio managers.
Venture Capital
It is often considered a subset of private equity investing. Investors make capital investments into start-up or early-stage organizations that show growth potential.
Many experts believe that you need extensive industry experience for successful venture capital investing. But with the right crowdfunding platform, you can make informed decisions.
Art and Collectibles
Collectibles are an alternative asset class. Examples include:
- Art
- Classic cars
- Rare coins
- Rare books
- Antiques
- Wine
- Jewelery
These objects increase in value over time, offering an opportunity to make high returns. Moreover, they have a low correlation with traditional markets like stocks and bonds, which can help reduce overall investment risk.
That said, understand that investing in collectibles requires specialized knowledge. It can also incur additional costs, such as insurance, storage, and maintenance.
Cryptocurrency
If you have even the slightest idea of alternative investments, you know cryptocurrency is high up on the list. Bitcoin, Ethereum, and countless other cryptocurrencies are not subject to a centralized bank in the way that traditional currencies are.
There are numerous ways to invest in crypto. You can do it through exchange-traded products (ETPs). You can even buy stock in companies that provide exposure to crypto-related products, such as mining equipment or blockchain technology.
Hedge Funds
A hedge fund is a private investment fund that pools money from numerous accredited investors and implements complex investment strategies to earn high returns.
Hedge funds are subject to fewer restrictions (compared to mutual funds), which means they invest in a wide range of assets.
