There are tons of companies you can invest in on the stock market. If a person chose to do so, they could easily invest in a variety of stocks and make a great profit. Millions of people do it every day.
However, variety is the spice of life. Stocks alone aren’t always capable of giving the returns and dividends we want. That’s why alternative investments are so popular. Alternative investments are investments that aren’t stocks, bonds, or cash.
Alternative investments can be a good way to make your money work for you without needing to involve the stock market. Many alternative investments offer excellent returns that match or even exceed the stock market. Check out some of these interesting routes below…
Real Estate Investment Trusts, or REITs, are one of the most popular alternative investments to be (occasionally) traded on the stock market. These trusts allow you to invest in real estate and leave the hard work up to the pros. So, it allows you to get a return on investment without having to be a landlord. Assuming you choose a good REIT, you can expect a high return that remains steady for years.
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Exchange Trade Funds are insanely popular. This kind of alternative investment is traded like a stock and acts like one. However, unlike traditional stocks, ETFs are made of multiple slices of different stocks rather than a single company. Sometimes, they may also be partly made of commodities, bonds, and these days, cryptocurrency.
If you’ve ever wanted to invest in solid goods like gold, silver, wood, or even oil, then you already know that these are commodities. Commodities can be extremely profitable, with returns easily exceeding 200 to 300 percent.
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However, they aren’t easy to invest in and often will require a specialized brokerage account. They also are very volatile, and most retail investors will not be able to get enough information to invest wisely. Risky as they may be, these alternative investments are rarely good to do large scale. That being said, buying gold and waiting for it to rise in value can be a good way to invest in commodities without dealing with brokerages.
4. Private Company Investments/Silent Partnering
Silent partnering is the act of investing in a company without running it. In exchange for the investment, the small business repays the person with interest, a share of the profits, or partial ownership of the company.
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That being said, private investments are very risky, as is silent partnering. Since private investments do not have the number of regulations that publicly traded ones do, getting the scoop on the business will not be easy. It’s common to hear of people just taking the money and walking away. However, the payoff can be great. Those who are able to invest in the right small business can see a lifetime of payoffs.
5. Peer-to-Peer Lending
This was one of the hottest alternative investments during the Great Recession, and as the name suggests, it means that you act as an official lender to someone else. Apps like LendingTree and Prosper allow you to vet borrowers, invest in a variety of loans, and typically will give returns of around 5% to %10, depending on who you lend to.
6. Hedge Funds
Hedge funds, in the simplest definition, are investment partnerships that tend to focus on high-risk investments. They are managed by professionals who try to "hedge" their bets on markets and typically give good returns. The problem with hedge funds is that they are private and exclusive. Getting in a hedge fund isn’t easy; most will require you to be worth $1 million before they allow you in.
Well, we couldn’t really have a list of alternative investments without talking about the elephant in the room. Cryptocurrency returns are extremely volatile, but people have made thousands, millions, and even billions because of them.
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They might not be backed by government regulations, and it’s still an emerging field, but so far, it’s been looking pretty darn good. Some apps, such as Robinhood, are now allowing people to invest in cryptocurrencies alongside regular stocks.
8. Equity Crowdfunding
Equity crowdfunding is a lot like peer-to-peer lending, however, it involves you and a group of other people investing in companies that you want to see succeed—rather than you investing in an individual borrower. Like peer-to-peer lending, this can yield great returns, but there’s always the chance of default.
If you have a good eye for the market and know the value of fine art, collectibles, or similar goods, you might be one of the few who can get a great return on collectibles. People who are wise in keeping their collectibles in pristine condition can often get sky-high returns if they are lucky. However, the market can change drastically with these. So, be sure you know what you’re doing before you try this.
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10. Tax Liens
Tax liens happen when a person owes a significant amount of property taxes to the government, and can’t pay them off. To get their money, the government will auction off their debts. The debtor still will have to pay late payment interest. People who pay them in full get interest on their payments, often tax-free. This is an excellent alternative investment for someone who wants to have a tax-friendly portfolio.
11. Real Estate
If you’re looking for a more "hands-on" approach, you can always consider buying up property and acting as a landlord. This definitely comes with its own risks, but if you are careful, it can easily become one of the best sources of passive income you have.
12. Film Production
Making Hollywood movies is a very costly procedure, but they also offer a lot of payoffs, too. Movie producers are the people who invest in creative works. Once the movie is created and shown to audiences, they receive a cut of the revenues as well as credit in the show. This can be difficult to get into, and investments start in the $2,000 range. However, if you hit a home run, you will get multiple times what you put in…as well as movie cred!
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13. Broadway Production
Last on our list is Broadway production, and it’s one that has proven to be very obscure among alternative investments. A typical Broadway show costs millions to make—just like movies. Broadway producers see similar returns and have equally high minimum investments. However, this one’s a bit easier to get into, since there are active communities that allow you to link up with directors.