Most individuals associate investing with the purchase of stocks, bonds, mutual funds, or exchange-traded funds (ETFs). Those that are more daring can choose a real estate investment trust (REIT). As a strategy to invest in gold, silver, platinum, and other metals, some investors may also explore purchasing mining company stocks or investing in a metals ETF.
However, what if you wish to avoid trading through a broker or online discount broker? Thus, alternative investment possibilities are necessary. Some of them can provide a substantial profit, while others may generate a more modest one. In any case, you are not required to choose publicly traded stocks, bonds, mutual funds, or ETFs.
When considering alternative investment opportunities, you must avoid fraud and get-rich-quick schemes. Instead, concentrate on legal investment tools that can help you succeed. Here are five genuine alternative investment options to explore for 2022.
1. Peer-to-Peer Lending
P2P lending, often known as peer-to-peer lending, is a relatively recent phenomenon. Online P2P services offer loans for any purpose, including commercial and personal usage. Provided you join the pool of investors who are prepared to lend money to others, you will be able to fund the loan if the borrower meets the requirements. There are several P2P lending firms available, such as LendingClub and Prosper.
No bank is engaged in peer-to-peer lending. Typically, your assets are combined with those of other investors, and you make a loan to the individual seeking funding. You will subsequently receive a monthly payback that includes the accrued interest. Typically, returns on P2P lending can be larger than rates on conventional savings vehicles.
The primary risk associated with P2P lending is loaning to individuals who may not have been able to obtain a loan from a bank or can’t access regular loan outlets, which may raise their probability of default. However, you may determine the borrower’s credit score and other conditions, and you have the option to finance or not fund.
2. Real Estate
When investing in real estate, it is possible to purchase and own property. You purchase a single-family home, duplex, or multifamily housing, such as an apartment complex, rent it out, and receive rent. Typically, you make a down payment, and the bank covers the remainder. The property provides rental income and appreciation.
Before you contemplate purchasing real estate, you should assess if you have what it takes to be a landlord. Things fail, accidents occur, and individuals fall behind on their rent. If you desire the financial rewards of property ownership without the responsibilities of being a landlord, you have a few alternative possibilities.
You may employ a property management business to handle the numerous obligations associated with property ownership, including tenant relations, rent collection, maintenance, and more. Obviously, this will cost you money, but it may be worthwhile in the long term.
You may also create a partnership with other investors to jointly acquire and manage a property. This can help you spread out some of the risks, and you may find someone with greater real estate and property management expertise than you.
Real estate-focused internet investment platforms are another alternative. Companies such as PeerStreet and Fundraise enable you to invest in residential real estate without assuming landlord obligations. However, you should investigate the costs and dangers associated with these products before investing.
3. Gold
Gold is commonly viewed as a physical inflation hedge, liquid asset, and long-term store of value. Consequently, it is frequently a sought-after asset class and a formidable rival to equities.
Gold is considered an excellent diversifier due to its low connection with other asset classes, particularly equities. This is accentuated during difficult times when gold may serve as a safety asset.
There are several ways for investors to gain exposure to gold, including the purchase and storage of real gold such as coins or bars, gold exchange-traded funds (ETFs), gold accounts, and indirect investments in gold mining companies or futures and options.
However, if you are a modest investment, you should choose direct gold investment options. Typically, this involves purchasing gold bullion, such as coins, bars, or other physical forms of gold. Gold allocations between 5 and 10 percent are considered good for a portfolio. In addition, it is essential to understand the elements that influence gold prices before investing in gold.
4. Owning Your Own Business
You may invest in your own firm, which has the potential to provide the best returns among all of your investment options. It might also fail and cost you a great deal of money and heartache. Nonetheless, your enterprises can provide consistent revenue and expand over time.
Some firms have extremely minimal starting and operating expenses. Included among them are virtual or online enterprises such as teaching, consulting, coaching, and IT assistance.
One strategy is to invest only a portion of your capital in a business and the remainder elsewhere. This strategy can help you sleep better at night.
Another option is to start a part-time company that you may do on nights and weekends. Thus, you will not have to give up the stability of your normal employment, and you will earn additional income.
5. Equity Crowdfunding
If you do not wish to own your own firm, you may choose to explore purchasing a stake in another’s. Equity crowdfunding platforms allow startups in need of capital to market shares of their firms. Among these websites are AngelList, CircleUp, SeedInvest, Wefunder, and others.
If you invest in a firm through an equity crowdfunding website, you will own a portion of the company and be compensated if it succeeds. The danger is that if the firm fails, you may lose all or a portion of your investment.
There have been several successful equity-funding cases, such as Cruise. This startup develops technologies for autonomous vehicles and was primarily funded through equity crowdfunding.
In 2016, General Motors acquired the firm, generating profits for investors and lending respectability to the crowdfunding market. You may invest in equity crowdfunding with as little as a few hundred dollars.
Your portfolio of investments should be diverse. This implies you should explore a range of equities, but you may also invest in investment vehicles other than stocks. Consider where your money would grow the fastest based on your risk tolerance. Remember, the larger the possible benefits, the greater the risk.
