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Investing Basics: A complete guide to investing in alternative assets

 

Investing in Alternative Assets Complete Guide [2022] – guest post from Greenery Financial

 

Investing in Alternative Assets isn’t as complicated as many people make it out to be — below are our top 24 alternative investments that actually work and are worth including in your portfolio — we’ll also cover what you need to know before investing in alternative investments and the unique risks and benefits they have.

We personally invest in the majority of alternative investments below and have first-hand experience with them, and intentionally are not including alternative investments that simply aren’t good for really anybody — or are unreasonable for regular people to make. None of us can open up and invest in a franchise like McDonalds without it taking up our whole day managing and operating it — so that’s not an alternative investment to us, but rather a business — we won’t mention such opportunities below.

We’ll only be covering alternative investments that work and are unique to one another and have their own advantages and disadvantages. If you’re new to alternative investing or just looking for some more ideas to diversify your portfolio you’re in the right place.

Below you’ll find a table of contents that’ll help you navigate the article as we’ve made this guide as complete as we could.

It may look like a lot but we’ve kept things simple and easy to understand for beginners and opted to not use too much industry-specific terminology. Keep in mind none of the below is investment advice, but rather just meant to be an introduction to alternative investing and a resource to give you ideas on how to start.

We’d recommend further researching each type of investment we mention below if they interest you rather than blindly investing in them — we have some guides and recommendations for some of the investments we’ll mention below you can check out, but we’ll also mention other resources/videos to help you get started with the investments that interest you most.

Anyhow lets get into the content — now that you know what to expect from the rest of this guide, let’s start at the very beginning.

What Is An Alternative Investment?

 

Alternative investments include anything that isn’t stocks, bonds, or cash. The most common form of alternative investment is real estate — however the real estate market is relatively correlated with traditional financial markets, making it not really the best alternative investment. It’s a good start though, and adds good portfolio diversification — however traditional real estate (apartments, single family homes, etc) in our opinion shouldn’t be considered an alternative investment.

Alternative investments generally have low-liquidity and are harder to buy/sell, and are often expensive or harder to purchase compared to traditional investments like stocks, bonds, and traditional real estate investments. Alternative Investments often have inverse correlations to traditional investments like stocks, or have completely independent pricing — meaning they do not necessarily go up when stocks go up, and they do not necessarily perform negatively during a recession.

It should be noted that some alternative investments require you to become an accredited investor We’ll specify if a specific investment mentioned below requires you to be an accredited investor or not — however pretty much all the ones we cover below are available to everyone. We know most people aren’t accredited, so we aren’t going to waste your time mentioning tons of investments most of you cannot access.

 

Pros And Cons Of Alternative Investments

 

Alternative Investments can be very beneficial to include in your portfolio — or they can be disastrous if implemented wrongly or without understanding the benefits and risks they entail. Alternative investments generally should be seen as long-term investments and hedges that help protect your networth and portfolio no matter market-conditions, however depending on your goals you may prefer certain types more than others.

Generally we’d say it’s safe and reasonable to have around 30% to 40% of one’s portfolio in alternative investments (although 20-30% is preferred by most people), however it’s important to not to rush into alternative investments, especially many types, too soon in your investing journey. We’d say picking a few to start and then slowly expanding the ones you’re investing in as your networth grows.

 

Benefits of Alternative Investments

 

Below are the top 4 benefits of Alternative Investments — there are many many more, however they depend on the type of alternative investment. These are the general benefits pretty much all alternative investments have.

Not Correlated With The Stock Market

 

The stock market is highly liquid and dependent on the state of the economy, while alternative investments are generally not dependent on the state of the economy or have the same level of liquidity that the stock market does.

This makes alternative investments a great hedge and portfolio stabilizer — as if there’s a concern in the economy, such as happened during the lockdowns brought on by the governments reaction to COVID-19, while stocks may go down as the economy becomes weaker and more unstable many alternative investments went up in value — part due to inflation expectations, part due to many of them not being effected by general economic trends.

Better Potential For High Returns

While stocks offer a relatively good rate of return over the long-term most alternative investments offer higher returns — however they generally come with less liquidity and more volatility along the way. A good example of this would be Investing in Art — while theS&P 500returned 9.5% per year over the last 25 years modern contemporary art has returned around 14.5% per year over the same time period — however it’s drawn-down/volatility is/was much higher during the same period.

Of course, there is no guarantee that any investment will give you high returns. But because alternative investments don’t move as quickly as regular investments, you can take your time evaluating the potential. This time spent researching will allow you to find the best options, giving you higher probabilities of success.

You Can Use Your Knowledge From Other Walks Of Life

 

You might not know a lot about finances and analyzing companies, and this is why for most people it’s better to invest in ETFs rather than individual stocks — but chances are you have knowledge in another area of your life that’s unique to your profession that you can use to have a competitive advantage when investing in alternative investments that you simply could not get when investing in traditional markets.

Knowledge of art, farming, construction, blockchain technology, or almost any other topic can help you analyze the investment opportunities and understand where the best deals really are and what is more likely to succeed — especially when it comes to start-up investing. If you’re knowledgeable about the arts and have a hobby or career in the arts you likely will have a competitive edge in investing in NFTs, regular art, music copyrights, etc, for example.

 

Downsides of Alternative Investments

 

Of course, there are always risks involved with investing in alternative investments — being aware of them will help you avoid making critical mistakes that could put your portfolio at risk.

Low-Liquidity

While Alternative Investments often have higher returns one of the prices that comes with is lower-liquidity and higher slippage when buying/selling the investment.

For example if you startups or private companies you’ll likely be locked into owning the company until it’s next funding round, or until it goes public, unless you use an online marketplace that allows you to trade it to other investors or find a 3rd-party investor on your own to buy it off you. Regardless when doing so, selling it early, it’ll often take many days to weeks to get the sale finalized.

In comparison with stocks and publicly traded companies you can sell near-instantly most days of the week and get the cash either immediately or within a few days if you are withdrawing it off the stock-brokerage platform.

Basically with alternative investments you will get your money back to you, but it’ll take time. The investment isn’t highly liquid and you won’t be able to rely on having access to the funds in the case of an emergency. This is one of the reasons why it’s generally best to hold alternative investments for the long-term (years).

Lack of Regulation

Depending on the type of alternative investment you choose there might not be a lot of regulations to protect you. You have to actually do due diligence and ensure what you’re investing in is from a reliable company/seller and that you are not buying into something fake, investing in a scam, or without fully understanding the hidden costs that such an investment may have or require.

This is why it’s generally best to get advice related to the investment from professionals, or to use trusted platforms to invest in alternative investments. You can also opt for investments with downside protection, such as real estate, which have less risks than other alternative investments.

 

 

24 Unique Alternative Investments Worth Considering

 

Below you’ll find our top 24 unique alternative investments we think are worth considering — we’re personally invested in the majority (15) of them to some degree, and believe all of them are good alternative investments and are good hedges or investments in their own way.

We’ll explain what the investment is, why it’s a good alternative investment, and in many cases how profitable the investments have been historically. We’ll mention ways we’ve invested in them and legitimate ways to get exposure to these assets without all the hassle/management of investing in them independently.

 

Private Equity Investments

 

Angel Investing

 

Angel investing is a form of startup investing — the money you use to invest is exchanged for equity in the business. They are a one-time investment to get the business up and running — or to expand the business that’s ready to expand but just lacks the capital to do so.

Angel investing often takes a lot of time, as you are expected to fund and mentor the business; however, this isn’t a bad thing. With your eyes and ears on the ground, you can steer the company away from any bad decisions typical of a new business, while not having to do all the leg-work of creating and running the business yourself — while sharing in the profit to a large degree.

If you do angel investing you’ll obviously want to do so in industries that you are knowledgeable about, that way your suggestions and advice will be valuable and helpful, as well as you’ll be able to spot good investments and ideas in the first place.

Venture Capital Funds

 

While Angel investing and investing in startups on your own gives you more control over your investments and higher potential for profit if you don’t have large sums of capital to invest (generally $50,000+ minimum, preferably a 300k~) it’s not really viable to invest in them on your own — and as a result it’s better to get exposure via venture-capital funds. Venture capital funds invest in startups on their own, with your funds, and take a small fee for the service.

Venture-capital funds are also useful to diversify your start-up investments to a different region — for example some are specifically investing in startups in India, and if you live in the USA and never have visited India and don’t want to go to a start-up hub in India, such as Bangalore, then it’d be easier to simply invest in a VC fund that’ll get you exposure to startups they vet for a small fee.

You can also use online platforms such as Equity Net or SeedInvest to invest in prevetted (or baskets) of startups, however generally finding a venture-capital fund that invests according to a certain strategy or in a certain industry you believe in is the better option.

Emerging Market Companies & Funds

 

Emerging markets are a great way to diversify your investments and are one of our favorite alternative investments to make — you can do so very easily either through traditional brokerage accounts, buying foreign-ETFs or stocks on their stock exchanges, or you can invest in private investment funds and small countries that don’t have internationally-listed stocks and ETFs.

You can obviously do this for any region of the world, or any country depending on your assumptions about the world. Our personal strategy when investing in such alternative investments is to use them as hedges and to diversify what currency our income is generated in — as well as to get exposure to high-growth inefficient markets. That’s another thing — smaller and more unknown markets are more inefficient, meaning you can get absurdly cheap companies from time to time as most investors in the west, with lots of capital, never think to invest in such markets.

Our favorite fund and #1 emerging market investment is in the African Lions Fund which is a fund that invests in sub-saharah african countries and is managed by someone who lives in the region and understands the market — which is VERY rare for emerging market funds. We want exposure to the potential high-growth region that is sub-Saharan Africa and no publicly traded funds have good exposure to it like the African Lions Fund does, and no other private fund we found is managed from within the region, by people who live there, so we felt it was the best option.

 

 

High Yielding Private Debt Investments

 

Stablecoin Lending

Stablecoin lending is our preferable high-yielding private debt investment as you can generally earn 8% to 14% per year with, in our opinion, less risk and hassle than other private debt investments (or really any debt/bond investment). You can lend stablecoins in many ways and earn way more than 14% a year, however those methods do carry extra risks and complexity — if you’re interested in them you’ll want to look into yield farming and liquidity pools.

The easiest and safest way to do stablecoin lending is to just buy stablecoins on a platform like Coinbase which charges no-fee for buying the USDC stablecoin, and then transferring it to a crypto-lending platform like Celsius, Hodlnaut, or Nexo — all of which offer good rates on stable-coins.

Peer-To-Peer Lending

 

Also known as P2P, Peer-To-Peer lending is when you loan money to another person. You essentially cut out the middleman by removing banks and the bureaucracy involved with most loans/lending — It’s a simple concept to help you achieve an easy passive income of around 4 to 8% returns. However, the person you are lending to might not have the best credit history, which makes it not the safest of investments — but ultimately it’s not all too risky either.

To help you avoid as much risk as possible, you can use companies like PeerStreet. They allow you to be the lender to prevetted borrowers — making it much safer than most P2P lending as the default rate, however they require you to be an accredited investor to use the platform.

Like with most loans, your lending time frame would be long-term, which means the passive income would continue for a long time — however this exposed you to higher risks regarding inflation. Ultimately while Peer-to-Peer lending is one of the most commonly recommended alternative investments, especially regarding debt, it’s not one we invest in — we prefer Stablecoin lending.

Hard-Money Lending

 

Hard money is a lending type that is usually involved in real estate investments. These loans are considered to be asset-backed/collaterlized loans — or STABBL (short-term asset-backed bridge loans). Traditional financial providers do not really offer this type of loan, and therefore the only option is either through a private lender or individual investor.

Hard-Money Loans are short-term answers to financing, and they are always secured by an asset — generally real estate — and a means for real estate flippers or other businesses to get financing for a project or business-venture. Generally Hard-money loans are expected to be repaid within less than a year, often just a handful of months, making them less at-risk of being affected by inflation.

If you have lots of cash and want to engage in this as a business it’s a great one — especially if you know reliable real estate investors to lend to already — however that’s very time-intensive. There’s a platform called fund that flip that vets flippers and provides you the opportunity to invest in the flips, to do hard-money lending, and earn an interest rate around 8% to 10% after they take their fees — which is pretty good.

 

Tax Liens

 

Tax liens are a little bit complicated and to be honest is becoming a bit saturated as of late — but if you can wrap your head around them and find an underserved market you can start making some large sums of money and a high rate of return — when someone fails to pay their property tax, the local government can sell a ‘tax-lien’ against the property to get the taxes from investors immediately.

In exchange investors get a relatively high interest-rate debt the property owner must pay, and if they don’t pay you can foreclose on the property and get it for free — while that sounds wonderful in practice it rarely ever happens, and when it does the property is generally in really bad condition.

You can learn more about buying tax liens at auctions there, but really this is only viable if you’re in a rural area now as there’s so much competition in cities. Yield on this alternative investment strategy is anywhere from a 4% in big competitive cities to 20% in rural areas with few (if any) participants in the auctions.

Small & Local Businesses Funding

 

If you want to support small businesses and your local community more you can lend directly to them using platforms like Mainvest. Generally you get around 10%  to 15% return after losses (if you diversify your lending) which is pretty good, comparable to other high-yielding options like Stablecoin lending.

Keep in mind while platforms that facilitate this, such as Mainvest, claim to allow you to invest in local businesses in reality you’re merely providing them cheap debt — as when you invest in them they do not actually give you non-repurchaseable equity in their companies — this is why we’re listing it in the high-yielding debt part of this article and not the private equity portion of this article.

Anyhow with Mainvest you can pick what type of business you want to invest in, learn how they plan on using your money, and their history of financial success. You can invest with as little as $100, and it’s a great way to get exposure to this form of debt — and in our opinion way better than bonds.

With that being said this option carries a bit more risk than some other high-interest debt investments in this article, as like peer-to-peer lending the term for these loans are often many years, meaning if inflation becomes high you may not make as much in real terms as you were expecting.

You can of course do this on your own and not through a platform like Mainvest, however it’s difficult to find and vet local businesses on your own, which is why we didn’t focus on doing it on your own — as it’s simply not viable for most people.

Alternative Real Estate Investments

 

While Real Estate broadly might seem like the obvious alternative investment, as we mentioned before in the article we wouldn’t consider all types of real estate to be an alternative investment due to it’s correlation to traditional markets as well as how, well, common it is to invest in a home for yourself or single-family rentals.

With that being said there are many types of real estate that we would consider to be alternative investments — as they aren’t correlated with traditional markets in general and aren’t on the majority of peoples radar.

 

Timberlands & Raw Land

 

Investing in Timberlands or raw land that has trees on it is one of our favorite alternative investments – it hits everything we’re looking for in an alternative investment and nothing we’re not — it protects against inflation, it isn’t correlated with the general economy or traditional investments, it has tail-winds that’ll make it more valuable in the future (namely population growth and carbon credits), and it can spin off income for you without any real work on your part.

Investing in the right lumber land can be a great opportunity for ethical, green and responsible investing. However, be sure that you are investing in the right place and make sure the type of land you’re buying has trees that are suitable for logging and (ideally) isn’t on some steep incline. Alternatively of course you can just invest in funds or companies that more or less do this for you — but those come with a fee for the price of being more hassle-free.

The return/yield on Timberlands can vary greatly — generally you can get around a 20% of land ‘harvest’ from the timber once every 5-10 years, and appreciation is more or less around the rate of inflation unless a city expands into your timberlands. It’s lower than many other alternative investments, but it’s a great portfolio diversification tool and is an excellent uncorrelated inflation hedge — not to mention there’s lots of potential for the earnings to increase in the future (due to ESG).

Commercial & Industrial Properties

 

While commercial and industrial real estate might not be something you’ve thought of investing in before it has unique benefits that other real estate investments generally don’t have — while prices are relatively correlated with the state of the economy commercial and industrial properties generally have benefits such as long leases, lower vacancy rates and a more stable long-term cash flow.

This being said industrial and commercial properties are a good way to diversify your cashflow sources and have outperformed most other types of real estate investments, generally netting a 8% yield per year from rents and an extra 2%~ in appreciation per year after all fees/management expenses.

If you don’t have the funds to buy a commercial or industrial property outright or don’t want to deal with finding a property manager, or simply want better diversification, then there’s many eREITs like Streitwise and Fundrise that have low-fees and usually yield around 8% per year as well as get 3% capital appreciation.

Farmland

 

It can be challenging to invest in traditional farmlands mainly because the opportunity doesn’t come up often — it’s very rare to find farmland for sale as farmers generally keep it within the family and continue working it, or lease it out to other farmers they know, so most of the land you’ll find for sale marked as ‘farmland’ is really just could-be farmland and needs to be worked to be turned into farmland.

Farmland generally nets slightly higher (but similar) returns compared timberlands — with appreciation being generally tied entirely to inflation unless the city expands to where your farmland is, and yield being around 3-4%/year if renting the land out on a limited-use basis (allowing more or less hay to be grown, nothing else) or around 6-8% if renting it out on a less limited basis where the farmer who’s renting can farm most things on the land (but generally would just graze cattle).

If you are interested in making a career out of farmland you can of course make WAY more if you know what you’re doing and understand your market — but that’s not passive or hands-off so it’s not really an ‘alternative investment’ at that point — but rather a business and lifestyle.

If you don’t want to do the due diligence in finding good farmlands that aren’t in floodplains or have other issues you can always use companies like AcreTrader or FarmTogether to get exposure to the sector. They buy farmlands directly from farmers or work with farmers and allow you to invest in their farmlands and share in the profits — generally you can expect inflation-tier appreciation and around 3% to 5% yield from them after they take their fees.

 

Burial Plots

 

Although the subject is morbid and uncomfortable for most people to think about burial plots are a high-profit real estate investment — really all you’re doing is buying small bits of land, so it shouldn’t be as troubling as it is to most people.

If you’re up for it burial plots can provide huge rewards, turning a few hundred dollars into thousands quite easily — however keep in mind it may take years for this to happen. Locations of high value tend to be those with great views, historical importance, limited access, or close to relatives — so if you decide to invest in burial plots those are things to consider.

You can provide a unique bit of value in this space by buying many plots next to each other — this way if a family wants to be buried next to each other in a specific highly sought after burial ground you can sell multiple plots to them. We don’t personally invest in this alternative investment type, however we’ve met many people who have and it seems to provide very good returns in the long-term, yielding the investors we’ve encountered around 30% per year — however it’s very illiquid.

 

Niche Collectables & ‘Non-Productive’ Assets

 

What most people think of when they hear collectables is antiques, coins, sports cards or memorabilia, or some rare historic toy that is now expensive — such as beanie babies. This is NOT what we are going to be mentioning below. We do not consider such things to be good alternative investments as they often have an ageing fanbase and as a result will have an oversupply amongst the remaining fanbase as time goes on — likely causing most of them to decline in price overtime.

Collectables like those often have a very distorted markets where the collectors hear of items being sold for millions of dollars that are similar to theirs and thus they believe what they have is also worth a lot — failing to realize the particular uniqueness and museum-quality of that high-value item that was sold that their collectables lack — this is why the collectables and non-productive assets we’ll mention below either have a real use-cases or are particularly high-value.

 

Ultra Rare Sports Items/Memorabilia

 

While you might be thinking why we’re mentioning this when we just knocked sports collectables and most collectables people collect above there’s good reason we’re including this — it’s because while sports items and memorabilia only has value so long as their big fans are alive and see their collectables as a priority ultra-rare sports tems and memorabilia has ‘eternal value.’ Let me explain.

My father for example has a 10ft by 20ft storage unit packed to the brim with sports collectables — he’s always been a big fan of collecting and this is what he did as a hobby and to invest — overall most of the items he has has slowly declined in value, and unfortunately, will be worthless by the time he passes and either I inherit them or he passes them off to charity. That’s the sad reality of it.

However there’s a few pieces he has that are truly unique — for example the baseball that won one of the World Series in baseball. That’s an ultra-rare sports item, one in around 120 to every exist, only a handful of which have truly unique stories — and of which only some will survive over the 21st century. His sports cards will be worthless come the year 2095 — there’s no disputing that — however that baseball could be something a museum wants to acquire,  and is willing to pay an enormous premium for it — as it’s truly become a one of a kind historic piece from an era that played and loved baseball.

Even if the sport continues to lose popularity, even if it completely dies in a professional-competition sense, it’ll always be part of American history, and it has the potential to be kept in a museum or collected for the historic tales associated with it.

This is obviously speculative and illiquid, however if you can secure ultra-rare sports items that you could see being included in a museum one day, even if the likelihood is small, it could be an excellent very high returning investment. The memorabilia market isn’t efficient and if you can find a good deal this is without a doubt the highest potential alternative investment one can make — however it’s definitely not for everyone.

 

Fine Art

 

Art is quite hard to invest in on your own unless you’re passionate about it — if you are you can make enormous amounts investing in new prints from up and coming artists on instagram — however for most of us we have no clue about what or who is investable in the art world. Most folks just think paintings worth millions are investable — but that’s not true, some art worth a few hundred dollars can be a great investment if done by an artist that people like.

If you aren’t interested in art and just want to invest in it you’d be better off buying a fund such as Masterworks offers — where you can buy fractions of high-value art or collections from up and coming artists — historically such funds return around 14% per year which is quite great, but come with lots more volatility than traditional investments. Diversifying between artists and styles is important due to the changing sentiment in art markets.

With Masterworks or similar platforms you can diversify easily and get good returns, as mentioned above likely around 14% — however with that being said if you take up art investing as a hobby, which takes lots of time, and buy from up and coming artists only via instagram (directly) you can make much much more — we’ve met investors who invest primarily in art this way and have consistently made 30%/year for over a decade now.

Wine

 

Although wine can be found easily, wine that’s investable is not easy to find or store for regular people who aren’t into wine or care what wine critics say — but instead just drink wine casually. Because of this usually it’s best to invest in funds that invest in wine rather than buy it on your own.

You may find it odd that wine can be an investment, but allow me to explain — when a particular vineyard has had a great year (good conditions to make good wine), their wine will generally be rated high by critics in the wine world. These well-known wineries often only sell a limited number of bottles due to the relatively small size of these world-famous wineries. As time passes, fewer and fewer of these bottles will still exist, meaning the unique taste (and notoriety) these wines carry will become more and more valuable over time — slowly being sold for more and more at higher and higher class places.

As the wine-world is out of the scope of most people and is very convoluted in general we’d say investing in wine is best done via a fund such as VinoVest, which helps people start investing in wine by curating wine investments — generally when a very well-known winery has a good crop they’ll pre-purchase thousands of bottles and put it into their storage cellar then sell it to people on the Vinovest platform, making a fee on the storage fees they charge.

VinoVest doesn’t have wine worth more than a couple of thousand dollars per bottle generally but instead invests in newer crops/bottles — meaning they’ll offer wines worth eighty dollars to a few hundred per bottle and then over time they’ll appreciate — historically returns for this type of investment is around 11%.

Cryptocurrency

 

Cryptocurrencies are our favorite alternative investment as it’s had fantastic adoption and momentum in recent history as well as great returns, and ultimately it seems like for the foreseeable future it’s going to continue to be the best performing asset class.

Of course the type of cryptocurrency you invest in will determine the returns you can make — our preference is investing in cryptocurrencies like bitcoin, ethereum, polkadot, and other smart-contract platforms and then lending them out for interest on platforms like Celsius, Nexo, Hodlnaut, and others, or stake them for yield on platforms like Kraken or Coinbase. Both Lending and staking cryptocurrencies offer between 5% and 10% per year in interest (paid in the cryptocurrency) which is fantastic in our opinion. That’s a great yield for such a high-growth asset class.

Be careful if you do decide to invest in cryptocurrencies — if you invest in low-quality coins or rug pulls you can lose lots of money, or even your entire investment, and you’ll have no recourse due to the lack of regulation in the space. This is why we stick to the big coins primarily. You canread our guide on investing in cryptocurrencies here, which goes in detail on how to start investing in crypto and develop a strategy.

Precious Metals (& Commodities)

Precious metals are a very common type of alternative investment — precious metals include platinum, gold, silver, copper, and palladium — Many people like to consider their metal stash as an insurance policy, but they can also be a good investment and inflation hedge.

The metals are bought and sold as either bullions (blocks of the metal) or in ETFs (exchange-traded funds), or of course you can opt to invest in precious metal or commodity mining stocks. It’s preferable to buy physical bullions you store yourself, or at the very least bullion stored with a trusted company that has independent audits of their physical gold/metal reserves — this is because in the precious metals and commodities space there’s a problem with ‘paper assets’ where you’re sold gold, silver, or whatever the commodity is, that doesn’t actually exist — which can present problems during volatile times.

Our personal strategy is to buy a small amount of physical gold to have for emergencies, as insurance, and then to invest around 5-10% of our portfolio into it as a ‘cash-proxy’ via platforms like Vaulted, which offer 3rd-party audited gold storage services. We like Vaulted asthey charge near-market rate when buying gold — they don’t offer other precious metals currently though.

High Value Classic Cars

 

High-Value cars are another one of those strange alternative investments most people never think they could get into — but due to investment funds it’s becoming more and more accesible to regular people. High-value cars, both classic as well as sports cars have returned around 13% per year historically and in recent years have returned much more than that — returning above 20% annually.

If you invest in high-end cars you’ll need to invest in proper storage of the car, which can be quite expensive — if you’re interested in doing this on your own the best place to invest and store high-value cars and vintage cars seems to be Las Vegas — this is where the biggest market for both buying and selling as well as storing, renting, is when it comes to such vehicles.

You can also invest through a platform such as Rally Rd which does it all for you and allows you to buy fractions of different cars they store — however this comes with a lower return potential due to the fees they charge of course. We don’t personally invest in vintage or high-value cars currently.

Whisky Collections

 

Collecting/Investing-in whiskey is much like Wine –– whiskies by popular brewers is produced in limited quantity to produce exclusivity and can be stored for years or decades to ‘age’ it, and as it is drank up by whisky connoisseurs and the rich the price begins to go up and up.

You have to choose your whiskeys wisely, if you’re investing in whisky — you can’t just buy a bottle of Jack Daniels and throw it in your closet and sell it for a massive profit after 10 years. You have to get special whisky and understand the market. If you don’t but still want exposure to whisky you can invest in funds or through platforms like Whisky Direct, which buys whole-sale whisky and stores it properly for you for a small fee.

Historically whisky generally goes up around 10% in value per year in general — however high-end premium whiskies can return higher rates as they age.

Quality NFT’s

 

We aren’t going to charm you regarding NFT’s — most are overvalued and in a bubble and will be worth nothing in the long-term. Most are uninvestable and should not be bothered with at all — however some high-quality NFT projects that have real usecases or companies/communities behind them are worth considering.

There’s a few types of NFTs that we’d say are investable — the ultra high-value ones like CryptoPunks or Bored Apes and the ones tied to gaming platforms — and it’s likely not for the reasons you’d think.

Most people think that Bored Apes are like art, and that they’re expensive because they have meaning — we don’t believe this, not to say it’s wrong, but we see a much more tangible reason they’re so expensive — and that’s the communities and access they bring — if you own a bored ape you get access to invest in other projects as well as direct-access to chatrooms exclusive to other bored ape owners, which due to the price of bored apes means you have access to chatrooms filled with likely rich folks who are into investing — potentially giving you insider intel or opportunities.

The other type of NFT we’d say is investable is gaming-related NFTs as they allow people to earn more in-game materials quicker which can be converted/sold for cryptocurrencies or USD/Fiat — there’s many people who’ve adopted these ‘play-to-earn’ games to make money online, making hundreds of dollars per week in profit after investing a few hundred dollars into a Gaming-NFT — one game people do this on is sorare which is a football/soccer NFT fantasy team game.

Ways to Invest in Yourself

 

We often forget that we can invest in ourselves — so we wanted to mention this. No matter how rich or wealthy you become it’s important to reinvest in yourself — not only because it’ll make your life better overall but investing in yourself can have the highest monetary reward of any investment you make.

Self investment can be in the form of learning new skills, going to college, taking an online or trade-school course, and finding a hobby that you find joy in and may be able to make money out of — it can also be in the form of simply planning for your future and improving your health, which reduces your expenses in the future.

 

Education & Skills

 

One of the highest return investments you can make is in your own education and skills — if you aren’t already in a high paying job that makes you at least a few thousand dollars a month this is likely where you should be investing your time and money rather than in financial assets. Build your personal assets instead — this can be done in many ways, however it should be done with intent and a plan.

More traditional ways of investing in your education and skills is of course going to college or a tradeschool, which can be good (especially trade schools), however there’s plenty of ways to do it in a way that provides more flexibility and isn’t as costly.

For example you can pick a topic and learn about it on YouTube for free, including business-oriented topics such as learning about SEO or WordPress development, and after some hundreds of hours of studying in the field you can provide services related to it to websites via freelancing sites such as upward.

Alternatively you can take hyper-optimized courses (preferred if you have some funds) that will get you there quicker — there’s plenty of courses on Udemy for pretty much all topics. One of our favourite courses for people who want to level up their skill-set and get a high paying job is done by Moralis Academy, which teaches blockchain development and skills, which are in high demand currently.

Health & Longeivity

 

Staying fit and healthy and lengthening our own lives is also an investment — not only will it make us healthier and more productive, feel better and have a higher quality of life, but it’ll also save us thousands of dollars over the long-term and help us avoid illness that prevents us from working, living, and just enjoying life.

We can invest time of course into this by going to the gym, which costs both money for the membership and time — which is money — or you can directly invest in your health by eating better foods and buying higher-quality foods. You can also conduct blood tests to see how your body and age is doing, which can uncover issues that will cost you lots of money and time in the future if left untreated — such as vitamin D deficiency.

As we discussed in our article abouthow to become rich and the lives of rich people, investing in yourself and your health is essential and something they all do — and that’s for good reason. Nothing is more important than your health — if your dead how much you made from your investments don’t matter.

Retirement & Future

 

While it’s important to invest in your health and your education/skills it’s also important not to neglect your retirement — we all know we can invest in our traditional retirement accounts like a 401k/IRA/pension, but there’s also alternative ways to invest in your retirement — you can use platforms like iTrustCapital or BitcoinIRA to invest in many alternative assets including cryptocurrency, gold/silver, NFTs, and often many other things mentioned on this list.

You can also invest in your retirement and future by opting to get a mortgage (or buy outright) on a house/apartment for you to live in during your retirement, or you can invest in an annuity which provides guaranteed income later in your life. We aren’t a big fan of annuities due to our concerns with inflation, but if that’s not a concern for you, or your hedge for that potentiality, then it could be something you want to include in your strategy.

Your Own Online Business

 

While this really depends on if you take the time to learn new skills and give yourself proper education, another way to invest in yourself is to improve your income directly by starting a side-hustle or passive-income business online. Our favourite is businesses that can be left to its own devices for the most part — for example, websites don’t need a lot of attention to gather money; however, you need to put a lot of effort in at the beginning to allow cruise control to take over.

There is no guarantee that your business will work out however, and this is why it’s important to build your skills and education first — and once you become an expert (or close to it) in a topic you should be able to see gaps that need filling in — you can then create a course, website, or even YouTube channel to fill those gaps in and start earning passive income.

Every $100 you can make passively online in addition to your job is like having an extra $24,000 invested in dividend stocks, so if you can get your side-hustle or small online business making some money it can really help you to become wealthy and maybe even achieve early retirement.

Summary & Conclusions

Alternative investments can be just about anything — but those we mentioned above are our favourites, all unique, all that actually work and provide diversification opportunities away from traditional investments.

It’s important to remember that alternative investments tend to be hard to liquify, but they often have higher returns than traditional investments. Because of this, as we mentioned above, it’s wise to first invest in traditional investments and build an emergency fund before putting too much of your portfolio into alternative investments.

We’d like to reiterate that it’s important to not chase yield or return when it comes to alternative investments — the primary purpose of them is to hedge your risks and stabilize your portfolio regardless of market conditions. They’re not really meant to get you rich quickly or be all you invest in — most people are best off having around 20-30% of their portfolio in alternative investments and the majority in traditional investments such as the S&P 500 or other diversified index funds.

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