5 Best Stock Market Investment Alternatives
In this post, we have compiled a list of five best stock market investment alternatives for your consideration. All facts and figures are current as of Feb 18, 2018.
A large number of people used to think of investing as buying stocks and bonds. The daring investors might think can also think about real estate investment trust (RIET). There are people who prefer to buy stocks of mining companies or investing in the metal exchange-traded fund (ETF) as a way of investing in gold, silver, platinum and other precious metals.
However, there are alternative investment opportunities, if you really want to avoid anything that trades through a broker or online discount broker. Some of these alternatives can generate a lot of revenue and others ways don’t make you huge money. Either way, you are not confused into choosing stocks, bonds and ETFs that are publicly traded.
While searching for stock market investment alternatives to putting your savings, you need to take extra cautions to stay away from getting rich quick traps and other scams as well. You also need some legit investment vehicle that may help you prosper.
1- Peer-to-Peer Lending
One of the best stock market investment alternatives is peer-to-peer lending. P2P is comparatively a new phenomenon. Few online services offer loans for business, personal loan or anything else you can think about. After the borrower qualifies for the loan, the loan is funded by the potential investors. You basically join the hub of investors who are willing to give the loan to other people.
In Peer-to-Peer lending, there is no bank involved. Typically, your savings are put with other others’ investor savings and together you make a loan to the individuals asking for funds. The best thing about P2P is that the rates of interest you get are usually higher than you can get from somewhere else. A number of people get returns on the loan that is in double digits. Here, each month you receive a fixed amount of money that includes the interest you owed.
The only risk in peer-to-peer lending is that you are giving the loan to the people who may not have been able to take a loan from a bank or can’t go through traditional loan passages. However, you have the choice to fund or not or can decide the credit rating for a borrower you consider.
2- Real Estate
When you invest in real estate, you actually buy and own property. This simply means becoming a landlord. In real estate investment, you buy a house, duplex or multi-family dwelling, such as an apartment complex and receive rent each month. The returns might be very high as you don’t need to pay the full price for the property.
Here, you just make a down payment and the bank finances the rest. You receive the rental income and also appreciation from the property. That is leverage.
You can invest in real estate all alone or can form a partnership with like-minded people. This will help you to divide some of the risks. You can find people who have more knowledge about real estate than you.
Before investing in real estate, make sure you have what it takes to be a landlord. There is a lot of headaches and none of them are routine. Keep in mind that, things break, an accident happens and people fall behind on rent. You also have an option to hire a management company to handle all these tasks, however, that will cost money.
Also Read: Online Investment to Make Money in 2018
3- Gold: Best Stock Market Investment Alternatives
Gold is one of the stock market investment alternatives. It is a tangible inflation hedge, a liquid asset and a long-term store of value. Consequently, it is a require-after asset class and also a strong competitor to stocks. Gold investment is considered as a bigger diversifier due to its minimum correlation with other asset classes, particularly stocks. This becomes more prominent in harsher times when gold often acts as a rescue asset.
There are numerous options for investors to take exposure to the gold such as buying and holding gold in the form of coins or bars, gold exchange-traded funds (ETFs), gold accounts, or indirect investing through gold mining stocks or futures and options.
However, you are a small investor, it is best to choose direct methods of investing in gold. For an individual portfolio, an interest rate of 5 to 10 percent on gold is considered healthy.
Also Read: How to Invest 100k to make 1 Million
4- Owning your Own Business:
One of the best stock market investment alternatives is to invest your money in starting your own business. This option has the potential to generate the highest returns of all investment choices. Putting your money into starting a new business also has a drawback. The business can fail and cost you a lot of money and sorrow as well.
However, there are businesses that produce a healthy, steady income and also grow over time. Think about the niches where you could be a consultant. You also try an online business or can put your investments in the offline business. Whatever option you choose, you always need money to start a business.
One way to approach this is to just put a part of your money into a business and invest the rest amount somewhere else. This approach can save you some sleepless nights. Another way to starting a business is to start a part-time business. This could be something that you can do on evenings or weekends. By that way, you don’t need to give up the security of your regular job, and you will be generating extra money.
Here, the risk is that the new business could collapse or the real owner might not be able to make payments to you from time to time. Hire a lawyer to set up the paperwork. So, you will be protected if the owner defaults.
5- Equity Crowdfunding
If you are reluctant to start your own business, you may consider owning a part of someone else’s. Usually, the start-up companies that need money offer shares of their companies on equity crowdfunding sites. If you buy shares of the company, you own a part of it. You will be rewarded if the company succeeds.
The risk is that if the company fails, you will lose your money. However, there are numerous equity funding success stories like Cruise Automation. This company develops self-driving technology and was largely developed through equity crowdfunding. General Motors bought the company, creating profits for investors, and giving an air of legitimacy to the crowdfunding industry.
You can put your money into equity crowdfunding by starting with just a few hundred dollars.
Also Read: Best Places to Invest Money in 2018
Remember, your investment portfolio should be diversified. This simply means that you should consider a variety of stocks. It also means that you have the choice to invest in a non-stock market investment vehicle. Always choose the option where your money would grow best based on your tolerance for risk. There is a common saying that, the higher the risk, the greater the potential rewards.
Share your thoughts regarding stock market investment alternatives in the comments. We love to hear you. Thank you!!