You lived beneath your means, used your self-control, and made your purchases wisely.
You’re eager to invest and watch your money grow. Trading public stocks certainly seem to be the most popular way to invest. But is it the only way?
Far from it. Before you burn yourself on the US Stock Exchange, take a look at all these alternative investment ideas. You don’t have to try them all yourself, but you may be surprised by some of these different ways to invest money.
Some of these investment options are time-consuming and hands on. Others can be set up in as little as five minutes and make money for you while you sleep.
Here are 10 smart alternative investment ideas to consider.
#1 – Peer to Peer Lending
Peer to peer lending lets private investors like you safely lend money directly to others through an online platform.
This type of direct lending has grown exponentially in the past couple of years.
Making passive income with peer to peer lending sites can start in as little as 10 minutes. Simply make an investor account, contribute however much money you like, and the site will find eligible lenders to borrow your money.
You start making returns as soon as lenders make their monthly payments.
#2 – Gold and Precious Metals
Investing in precious metals is a great alternative to investing in the stock exchange– but that doesn’t mean it’s simpler.
People have been investing in gold since the dawn of civilization. In times of economic upheaval, precious metals usually keep their universal value. For example, some refugees fleeing Nazi Germany in the 1930’s bribed their way out of the country with gold and other precious metals.
There’re several ways to invest in Gold – the universal currency:
- Physical bars and coins
- Options and futures
- Mining Equities
Technically, you could also invest in ETF and ETN products. But since those are up for trade on the stock exchange, we’ll leave them off this list.
#3 – Real Estate
Investing in real estate is the classic alternative asset to stock options. Thanks to modern tech and the internet, getting started with real estate investment is easier than ever.
Here are several ways you can start investing in real estate…
- Active investing: Directly investing in property yourself, with your own knowledge, money, and time. This method is the most time consuming and high risk.
- House flipping: Buying cheap property with the intention of fixing it up and selling it for more. The longer it takes to renovate and sell each house, the more expenses you accrue. But there are plenty of people who successfully house flip full or part-time.
- Owning rental properties: Making regular monthly income by renting out a property you own.
- Airbnb: Signing up for an online platform that lets you rent out all or part of your home whenever you like at your own price.
- Passive real estate investing: Contributing capital to someone else who does all the work investing in property for you.
#4 – US Treasury Securities
Treasury securities are portions of the American federal debt. When you buy bonds of US Treasury Securities, you’re lending money to the federal government for a short time.
These bonds are considered the safest investment you could make. They’re backed by the full faith of the US government, so interest and fees are always paid on time.
Treasury bonds are popular with all kinds of investors. Individuals buy a small portion of treasury bonds. Banks, mutual funds, pension funds, state governments, and foreign investors all invest in Treasury securities.
The interest rates won’t be as high (read: profitable) as other investments. Still, adding these to your total investment portfolio is a smart move. That’s why so many people do it.
#5 – Invest in a Small Business
There are two ways you can make money by investing in a small business…
Equity Investment: In other words, buying ownership of the business. You provide starting capital, usually in the form of cash, to help the business stay afloat. In return, you get a percentage of all the profits that business brings in.
Debt Investment: You provide a loan to a small business. In return, the small business promises to pay back the full amount plus interest. This has less risk, but much less reward than owning a percentage of a company’s profits for as long as that business exists.
Which one is right for you? There’s no concrete answer to that question. It depends on how much money you’re willing to risk and the type of business in question. Either way, investing in small business is one of the best non-stock options out there.
#6 – Collectible Hobby Items
Though it might not be as predictable as gaining interest on a loan, investing in hobby collectibles is a lucrative business. If you invest in hobby items right, you could make millions.
Here are some alternative things to invest in that will grow in value over time (assuming you care for them well): Rare comic books, Coin collections, Stamps, Dolls, Action figures, Novelty board games, Old sports trading cards, Movie Props, Books, Watches
Now, getting your hands on any of these is entirely up to you. There’s no one-stop-shop where someone will just hand you a stack of the world’s rarest comic books. That’s exactly why these are all so valuable!
Better start hunting.
#7 – Artwork
This list of alternative investment ideas wouldn’t be complete without mentioning fine art. But investing in art has a whole different set of rules than investing in anything else.
It’s easy to buy paintings and sculptures if you have the cash. Selling that art for a profitable return is much harder. The rules of public information that regulate the stock market don’t apply to the art world.
There’s no easy way to identify how much you should be getting paid for the art you sell. Sometimes, it’s hard to tell if the piece of fine art you just bought is even legitimate. But if you do it right, fine art can add millions of dollars of value to your total estate worth.
#8 – Cryptocurrencies
A few short years ago, people thought cryptocurrency was a scam or a fad. Online currency is here to stay, and it’s one of the most popular unconventional investments.
Bitcoin and Ethereum are by far the most popular cryptocurrencies. There are many reputable “binance” (Bitcoin finance) sites through which you can make investments.
Advocates of cryptocurrency predict a world where Bitcoin replaces the Euro and other forms of currency. Whether that ends up happening remains to be seen. But investing in bitcoin may be a great way to expand your investment portfolio.
#9 – Paying Down Debt
Now, this is not an investment in the traditional sense. But you can save money on interest and increase your market value by strategically paying down bad debt.
There are some forms of debt that actually increase your leverage and improve your credit history. Student debt, for example, is considered good credit that improves your credit history. Payments on student debt are tax deductible.
Other forms of debt, however, may not be worth waiting to pay off. You can save your credit score and save yourself thousands of dollars by strategically paying down debt faster than expected.
#10 – Invest in Your Education
No, this is not an advertisement from your local university. It really does pay to invest in your own education. Say for example you spend $2,000 on a course that teaches you to learn a new software. To some, that may sound like wasted cash they could have used to invest in something else.
But what if the software you learn to use allows you to start selling your tech services for $50-100 per hour for the next five years? You will have made that initial $2000 investment back within your first week of full-time tech consultant work.
It pays to be smart! And you’re taking the first step toward investing in your own education just by reading posts about investments, like this one.
Even More Alternatives
Don’t think you’re limited to investing in the stock market. There are plenty of alternative investment ideas you can explore to expand your portfolio.
Remember, it’s not wise to put all your money into one investment option– but you can’t spread yourself too thin either. Pick several investment ideas you like most, and get good at managing those. Building wealth through investing takes patience.
For more great information about finance and building wealth, check out more of our blog.