5 Alternative Investments for 2022
Investing in the stock market certainly is attractive, but recent market volatility may have scared some investors and moved them over to alternative investment platforms.
One of the main reasons why American investors are moving to alternative investment apps is to diversify, where more than 4 in 10 Americans (44%) prefer alternative investment products for diversification purposes.
Remember the saying: Never put all of your eggs in 1 basket.
The same goes for your investments.
What is an Alternative Investment?
Alternative investments have become a popular option lately for investors to grow their money and diversify their portfolios.
Alternative Investments Defined: Alternative investments are investments you make in anything other than the traditional investments of stocks, bonds, and cash.
As you can see, the term “alternative investments,” is not specific and describes a very broad range of investments, such as:
Stamps
Jewelry
Artwork
Farmland
Real estate
Private equity
Precious metals
Cryptocurrency
Other collectibles
Typically speaking, only high investors used to resort to alternative investing platforms.
For example, well-known institutions like Yale University have invested up to 77% of their endowment fund in alternative investments.
Thanks to technology and the booming financial industry, alternative investments are now a feasible investment option for regular investors (like you and me).
Remember to do your research before you financially commit to one investment over another.
So, are you ready?
Let’s dive right in.
5 Best Alternative Investments for 2022
1. Cryptocurrency
Cryptocurrency has been all the rage in the last ten years. Since 2020, the crypto market has faired particularly well, even if it’s come with its signature massive swings up and down.
The initial cryptocurrency crazy may be fading into the rearview mirror, but this isn’t due to a lack of interest. On the contrary, widespread adoption is becoming increasingly more likely.
This has the potential to make crypto a solid investing strategy that could last far into the future. It may not yield the same explosive risk-reward experience as the early days, but the crypto ride is far from over at this point and worth further investing consideration.
2. Fine Art
Artworks such as paintings are a great $2 trillion asset class to invest in. You can see in the graph below the annual return of the S&P 500 compared to contemporary art.
Contemporary art has provided annualized returns of over 14% in the last 25 years. With demand from China rising and a growing number of people joining the ultra-high net worth segment, the returns are projected to continue. A struggling artist is a cliche in front of rare maestros whose work achieves fame on a global scale. The work of legendary artists like Van Gogh, the Picasso priced at millions of dollars, and contemporary artists like Kusama, Jeff Koons, Takashi Murakami whose works attract higher prices. The right kind of investment in fine art is done by investing in the work of such artists whose paintings are purchased by ultra-high net worth individuals for millions.
3. Peer-To-Peer Lending
The decentralization of many traditionally expensive investment opportunities has opened up many unexpected investing doors. One that continues to grow in popularity is peer-to-peer lending.
An investment that is as simple as it sounds, peer-to-peer lending involves committing your own money to a system that lets others borrow it. You’re paid back in small installments that ultimately leave you with your original cash with a tidy sum of interest on the side.
While peer-to-peer lending is a valuable investment option, be careful how you go about allocating your loanable funds. Look for a trusted lending platform, like Upstart, to faithfully manage your money.
4. Real Estate
When investing in real estate, you can buy and own property. You buy a house, duplex, or multi-family dwelling, like an apartment complex, have tenants live there, and collect rent. In many cases, you make a down payment, and the bank finances the rest. You get the rental income and appreciation from the property.
Before you consider buying property, ask yourself if you have what it takes to be a landlord. It can come with a lot of headaches: Things break, accidents happen, and people fall behind on rent. If you want to get the financial benefits of property ownership without all of the responsibility that comes with being a landlord, then you have a few other options.
You can hire a property management company to hand the many responsibilities that come with property ownership, including dealing with tenants, collecting rent, making repairs, and more. That will cost money, of course, but it could be worth it to you in the long run.
You can also form a partnership with like-minded investors to purchase and manage a property together. This can help you spread some of the risks and you may find people who are more knowledgeable than you when it comes to real estate and property management.
Another option is to use an online investment platform that focuses on real estate. Companies like PeerStreet and Fundraise allow you to invest in residential property without having to deal with the responsibilities of being a landlord. However, these types of investments come with some fees and risks that you’ll want to research before diving in.
5. Virtual Assets in Metaverse
Recently metaverse has been of a hype where people can buy virtual assets on virtual worlds (metaverse), they even include plots of lands, statues, parks being sold for millions of dollars, says Manoj Dalmia Founder and Director-Proficient Equities Limited.
Conclusion
With alternative investments, it has been made sure that investors have access to non-traditional forms of investments with which they can diversify their portfolios better. This way, the investment remains safe from the volatility and uncertainty of the stock market.
For a long time, it was believed that investing in alternative assets is for high net worth individuals but due to regulatory changes around the world, things have become feasible for retail investors too.
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