What Are Alternative Investments Explained With Examples
Now-a-days, many people are moving away from traditional investment routes, and choosing alternative investments instead. There are tons of different alternative investment routes out there, and this is a big part of the reason why they are becoming so popular.
Yet, while these alternative investments are becoming more and more popular, a lot of people still don’t really understand what alternative investments are. So, if you have been thinking about alternative investments, but still don’t understand what they are, you are in the right place.
In this guide, we’re taking a look at everything you need to know about alternative investments. Including what alternative investments are, and some examples of alternative investments that you should consider.
So, if you want to find out more about alternative investments, keep on reading!
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What is an Alternative Investment?
First things first, what is an alternative investment? Well, essentially, an alternative investment is any investment route that strays away from the traditional investment routes.
Traditional investing covers any form of traditional investment that hasn’t been developed in recent years and can basically be categorized by three different things: stocks, bonds, and cash. Anything outside these 3 categories falls under the umbrella term of alternative investments.
These investments are considered to be “alternative” investments because they are not what people would traditionally invest in. Traditionally, your money would go one of three ways: stocks, bonds, or remain in cash.
But nowadays, there are a lot of other things that you could invest your money in. Some of these could be considered traditional investments by some, simply because they are something that money has been invested in for many years.
Take property, for example. Property is considered by many to be a fairly traditional investment, even though it is actually an alternative investment. At some point in their lives, most people will invest some of their money in property – even if it is only in the form of purchasing their own house.
So, this really highlights that a lot of alternative investments are actually now considered to be fairly normal investment routes. With that in mind, let’s take a look at some examples of alternative investments.
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Examples of Alternative Investments
If you are considering going down the alternative investment route, there are plenty of different options to choose from. The list of alternative investments is incredibly diverse, and constantly growing, but here are some of the best examples of alternative investments, and the different options you have available for investing your money in.
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First things first, let’s address the alternative investment that we have just spoken about briefly, and that is real estate. Real estate is an excellent investment route, and one that most people try out from time to time. In fact, it is an investment route that most people will invest at least a small amount of wealth in during their lifetime as they will purchase their own home.
Real estate is an incredibly popular investment route and that is because there are tons of different ways that you can invest your money in real estate. You can invest your money in residential real estate or commercial real estate. Likewise, you could choose to get your hands dirty in the process, or take a hands-off approach. You can even get started in property investing without any capital – it really is that versatile.
From developing residential portfolios to building properties from scratch, and renovating houses to flip for profit, there are tons of different investment routes in real estate. You could even take a hands-off approach and simply join a real estate investing group. The profits to make from real estate investment are high, and it is often considered a “safe” investment, and that is what makes it so popular.
Similar to investing in the stock market, many people choose to invest in a hedge fund. Hedge funds are actually very similar to the stock market, and for some people they can be a little confusing. However, they are considered to be an alternative investment.
Hedge funds are pretty complex. They require you to invest your funds into companies that trade in liquid, then use these liquid assets to invest the money further in hopes of generating profit. There have been many high profile cases where hedge funds have failed, and people have lost lots of money. But most of the time hedge funds can allow you to make a decent return on your investment.
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Something that is definitely considered to be an alternative investment is collectibles. However, these are one of the alternative investments that have been around for a very long time, yet have always been considered alternative. Simply because they aren’t a mainstream investment route.
There are tons of different things that you can collect, and collectibles can generate a huge amount of profit when they are sold. Especially if you have a full collection to sell. From rare wines to fine art, from baseball cards to toys, and stamps to cars, there are a huge amount of different things that you can collect and invest your money in.
As an investment route, collectibles require you to have a certain amount of knowledge about what you are investing in. For that very reason, you do need to care about what you are investing in, otherwise you can quickly lose interest, and if you lose interest it can be easy to lose your way and stop making profit. But if you have a keen interest in what you are collecting, then collectibles are an investment route that will allow you to make money, and enjoy yourself while you do it!
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In short, alternative investments are any type of investment that are not considered to be traditional. There are only 3 types of traditional investment, they are: stocks, bonds and cash. So, any investment that doesn't consist of these traditional investments will be considered an alternative investment.
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