4 Alternative Investments Every Investor Should Know

When it comes to investments, most people place their bets on stocks and bonds. Some adventurous investors may put money in an REIT (real estate investment trust) or a metals ETF as a way to invest in real estate or metals.

But there are other investment options out there that don’t involve a broker.

1. Gold

Gold is one of the oldest and most popular forms of alternative investment. It’s a tangible, liquid asset that offers long-term value. Even today, it remains a strong competitor to stocks. And when economies fall on hard times, gold becomes a rescue asset; a safe haven.

Purchasing physical gold is one way to get involved in this investment vehicle. Many people prefer this option because they can hold the gold in their hands. But you also have the option of investing indirectly through gold mining futures or stocks.

2. Real Estate

There will always be a demand for real estate – people need housing. There are some schools of investors who prefer real estate to stock or bonds.

You have a few options when investing in real estate. One way is to invest directly by purchasing property and renting it out. This can be an apartment complex, condo, single-family home, duplex, or a multi-family home. Just make the down payment, and the bank finances the rest.

When purchasing property directly, location is everything. There has to be demand, and there has to be a high probability of a good return.

Let’s say you purchased a condo in Myrtle Beach, a hot tourist destination. A one-bedroom condo with an ocean view could run you $60,000 or more. The price is right and the local economy is booming, but who will rent out your place? There’s a good chance you’ll have higher demand from tourists than residents looking for a permanent rental. In this case, your income isn’t as reliable, as tourist season fluctuates. You may be booked up for the summer, but have little-to-no income during the late fall and winter months.

If you’re looking for this type of property (vacation rentals), that’s one thing. But if you were hoping for a stable, reliable stream of rental income, you need to choose a location that is favorable to long-term renters.

3. Investments in Private Companies and Start-Ups

Private companies and start-ups need funding just like any public company. You can choose to invest directly into a start-up, known as angel investing, or a private company.

This type of investment is not for the faint of heart, however. Start-up investment is a high-risk, high-reward strategy, as many start-ups never get off the ground.

Investing directly in private companies may be a little safer, as you can target more mature companies that have established a market share.

4. Wine

Investors can enjoy a return of 6-15% annually when investing in fine wine. Prices of certain vintages can vary from one year to the next, but wines from the most sought-after vineyards tend to increase eventually as the supply becomes scarce.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.