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While stocks are the cornerstone of the American and Worldwide investment experience, not everyone is interested in putting everything into the stock market. Indeed, it can make sense, depending on your preference and your risk tolerance, to look for alternative investments.
If you are considering other places to invest your money, here are 5 alternatives to stock market investments:
When you aren’t planning on investing in stocks, one of the time-honoured alternatives is bonds. You can keep your principal (relatively) safe with bonds, and earn interest.
Many investors turn to government bonds in times of economic uncertainty, since they are considered the next best thing to a “sure” thing. If you want a higher yield and are willing to take on a little more risk, you can consider emerging market bonds.
Yes, we’ve heard a lot about how annuities can be a nightmare — and without a doubt, they can be. However, there are some annuity products out there that aren’t so bad.
With the right annuity, you can plan for regular, reliable income (assuming you trust the insurance company selling the annuity). Your investment won’t see a lot of growth, but it will enable you to receive a regular chunk of income when you’re ready for it.
Before you invest in an annuity, though, do your homework. Annuities are known for fees, as well as for beneficiary snags and potential tax issues.
An increasingly popular investment option is P2P (peer-to-peer) lending. You can use P2P lending as a way to earn interest on your money — and usually at a better rate than bonds or cash.
In some cases, particularly during an economic downturn, annualized returns from P2P loans can even beat stock market returns.
However, you still run the risk of loss. If the borrower defaults on the loan, you could lose your principal. But with a little careful probing, it’s possible for you to find solid prospects for your P2P portfolio.
And if you want to help others while earning a return on your money, you can consider microloans to those in third-world countries who are trying to start businesses to raise themselves out of poverty.
Why not invest in something you can touch? You can buy the property and hold onto it, hoping to sell it for more later (a strategy my grandfather employed to great success when he sold to developers after 20 years).
Another strategy is to buy an income property. You can purchase property designed to provide you with regular income from renters. In either case, real estate can be a solid alternative to the stock market — if you can handle the management aspects.
One of the most popular alternatives to the stock market is gold. When you invest in physical gold, you not only have something tangible, but you also have something that nearly every culture has considered valuable for thousands of years.
In a pinch, you can use your gold as currency in some places. You can hoard it and wait for the dollar to collapse (if you believe that’s what’s coming).
As long as you understand how to counteract some of the difficulties of investing in physical gold (where to store it, etc.), it can be a fine choice for some investors.
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