There are several options you can choose from if you want to make new investments. Whether you’re saving for retirement or anything else, it’s important to understand the scope of available investments.
Keeping up with stocks isn’t for everyone. So, let’s go over what you can invest your money in besides the stock market.
Among professionals, investments in bonds often come alongside investments in stocks.
Bonds are, in essence, loans that you can make to a business or government institution. Your return on investment comes in the form of interest that is paid on your loans to them.
Bonds are typically less profitable than stocks. But they are also less risky. When you invest in bonds, you are not buying ownership of any organization. But your investment comes with a promise for repayment with interest. That’s why bonds are known as “fixed income” securities.
Peer to Peer Lending
Peer-to-peer (P2P) lending is a newer form of investment that is growing in popularity. Essentially, you lend money to a borrower over a P2P network. The borrower must then pay you back, and you make a profit through interest.
P2P loans do have risks, particularly if the borrower defaults on the loan or declares bankruptcy. But if you learn effective P2P lending practices, you can single out less risky borrowers and earn more through interest.
The real estate investment space is huge. The simplest way to invest is to get a mortgage and mortgage insurance, buy a property and rent it out. You’re not limited to houses, as there are less expensive and less risky investments. Other examples of real estate investments include:
- Service centers
- Office space
- Commercial units
- Industrial property
Beyond actual property, you can make other real estate investments that are far cheaper and more hands-off:
- Real estate investment trusts (REITs)
- Real estate funds
- Crowdfunding for profit
- Real estate syndications
Cryptocurrencies are decentralized digital currencies. Decentralized meaning that they are not evaluated or (thoroughly) regulated by central banks or organizations like the SEC. However, in some cases, the SEC has gotten involved, such as when they charged two Ripple executives for violating securities laws.
Bitcoin is the most well-known and valuable cryptocurrency. Overall, the cryptocurrency markets are extremely volatile, with prices fluctuating substantially and often very quickly. They are not a safe option, but if you’re not very risk-averse, they do present profit opportunities.
Precious metals (with gold being the most precious) are very popular alternatives to the stock market. That’s in part thanks to thousands of years of history of it being highly valued among cultures across the globe.
Insurance and financial advisors typically see gold as a hedge against inflation. It’s also a commodity that tends to become more valuable when stocks, cash, and other mainstream investments lose value. The price of gold even tends to rise when bad news strikes. This makes it the most popular of the “safe haven” investments, above treasury bonds, Japanese Yen, or even US Dollars.
Paying off Debt
Paying off your debt isn’t exactly an “investment”. However, if you’re looking for alternatives to investing in stocks, this is actually one of the best places to put your money.
You don’t receive a return on investment for paying off debt. However, you do vastly improve your financial prospects the faster you pay off your debts. The more money you set aside for this purpose, the less you end up paying in interest. That means more money in your pocket, and more opportunities to invest in stocks, or anything else we’ve gone over.
Paying off debt isn’t an investment plan. But it will certainly help set you up to be ready for more substantial investments going forward.