3 Ways to Profit from Alternative Markets
Want to earn better returns from your investment portfolio? Wikipedia defines alternative investments as those asset types that fall outside the usual stocks, bonds, and cash. While that may not sound like it leaves much room for speculation, the list of what’s considered an alternative investment is actually quite long and ranges from real estate and commodities, to more out-of-the-box offerings like rare collectibles and venture capital.
According to industry experts at sites like Money Management, alternative investments tend to outperform equities when traditional markets are down, and including alternative markets in your investment strategy can be an effective way to substantially lower volatility.
Unlike many shares that are bought and sold on the stock market, real estate investment involves real property of some type, whether you own that property yourself or it’s owned by somebody else. Profits from investing in real estate usually come from a combination of rental income and an increase in the property’s value over time.
Examples of lucrative real estate investments can include apartment buildings, hotels, shopping malls, office buildings, and even vacant land. But if you don’t want the potential headaches associated with being an actual landlord yourself, earning income through real estate can be as convenient as buying shares in a real estate investment trust (REIT), or investing in property through a real estate investment management company.
As a broad term that includes raw materials like oil and gold, as well as financially significant crops like corn and soybeans, commodities offer several ways to turn a profit. You can buy them outright and own them yourself (great for precious metals like silver and gold), take advantage of exchange traded funds or ETFs (baskets of stocks in a specific category), or invest in commodities futures or options.
Today’s advanced investment software makes it relatively easy to stay actively invested in complex entities like commodities, and sites like betterment.com and wealthfront.com in the US, and invest.com in the UK, are all helping investors to do this by providing algorithmic technology that automates investing for better efficiency with lower fees.
Angel investing and equity crowdfunding are two examples of ways in which you can invest in startups and other fledgling enterprises that need your help to grow big and strong. You won’t find these companies on the stock markets, but if they ever become successful enough to get listed there – or to be sold at a profit – your initial investment can really pay off.
Angel-type investments are often eligible for attractive tax breaks, while crowdfunding generally gives you two options for participation – investing directly with the company in question, or buying in through a designated website.
As wealth management expert Wendy Connett explains on investopedia.com, alternative investments add diversification to the investment portfolio and mitigate volatility because their returns don’t correlate to the typical stock market offerings. And since they also offer a number of tax benefits that simply aren’t available with traditional investments, alternative returns have the potential to be higher than those of the average stock or bond.