5 alternative investments to the stock market


One of the best ways for people to build wealth over time is to invest money in the Stock Market.

However, stocks are not the only effective way to invest money and make a profit. You can grow your money in other ways.

Alternative investments are defined as any type of venture that falls outside traditional stock and bond investments. Why choose alternative investments? It is wise to invest in other assets other than those that are directly tied to the stock market’s performance.   Doing so will mitigate an investor’s portfolio volatility, hedge against downside and boost portfolio returns.

Here is a list of 5 alternative investments that covers some commonly known assets like real estate and precious metals, but also lesser-known investment options like making money from people who play poker online, online trading or equity crowdfunding.
  1. Real Estate

When thinking of non-stock investments, real estate is the very first thing that people consider. There is a nice return on residential real estate, but there are also considerable risks. If you have extra money, buying real estate property, especially in big cities like London takes a bit of research or expert advice. When investing in real estate, investors will buy and own property. If done properly and with good advice, the returns can be very high because the owner usually doesn’t have to pay in full for the property. A down payment is usually made on a certain property, and bank financing takes care of the rest. However, the owner can now get the rental income and property appreciation. This is when leverage comes in.

Owning property does come with a lot of unprecedented challenges such as accidents and breakage, which cost money.

For this year, real estate’s income yield in the United Kingdom continues to look attractive. Investors are advised to focus on pockets of potential outperformance within specific sectors such as industrial assets, healthcare sector and senior-living properties. This is largely due to the UK’s ageing population.

  1. Gold and other Precious Metals

Precious metals are tangible commodities that retain their intrinsic value. Investing in precious metals is a safe haven approach to diversification and a partial hedge against equities. Among the precious metals, gold and silver are the most popular among investors. Platinum is also a great investment choice because it is a rare metal and it has many industrial applications.

When investing in gold, silver, and other precious metals, it is best to research extensively on the latest market trends. For instance, for this year, gold investment demand is projected to increase slightly. Gold is a liquid asset and it has a long-term store of value. Because of fabrication demand for silver in manufacturing solar panels, silver investment demand is expected to rise from 108 million ounces in 2017 to 128 million ounces in 2018, and it is still seen as a long-term uptrend.

The prices of gold and silver are volatile but despite of this many investors believe that their investment will be effective in protecting against inflation in the long run.

  1. Backing and Staking in Poker

What many people don’t know is that one lucrative investment that they can get into is backing and staking, which are both related to playing poker. The poker community has known this for years. In big buy-in poker tournaments, players sell their action, which is also known as getting staked. In other words, staking is the practice of financially supporting players in exchange for a cut in their winnings. For example, when a poker player intends to play 888 Poker’s $10,000 World Series of Poker but doesn’t want to put up the entire amount, they can sell action to a willing investor. An investor will get a percentage of potential winnings depending on how much money is put in. Staking is a growing business. Statistics show that more than half of poker players and online poker players who play in WSOP were staked last year alone. Any poker enthusiast can go online and easily buy a piece of a player’s action. Money can be invested in all types of poker games like Texas Holdem, Omaha Hi Lo, and much more. Many fans say that staking isn’t only just about the money.

When poker players are backed, on the other hand, this simply means that an investor puts up the entire amount and the winnings are split 50%. The player gets half of the winnings and the backer gets the other 50%.

Investing in poker can be quite lucrative. Players use staking to scale their poking-playing trade. Most experienced players stake or back other players when they themselves are unable to attend a buy-in game. Staking and backing also affect the poker players because it can improve their performance at the table.

  1. Peer-to-Peer Lending

Many people haven’t even heard of peer-to-peer lending, but it is fast becoming a legitimate investment opportunity. This is how it works: there are online services that match the investor with businesses and individuals that are looking for loans. A borrower usually gets a lower rate compared to a bank. There is no bank involved in this case. Borrowers still need to qualify and once they do, the loan will be funded by an investor. Investors get returns that are in the double digits. Depending on the credit risk, the return can still be potentially higher versus similar fixed-income investments.

This particular investment is fraught with risks. Many candidates that are looking for peer-to-peer lending couldn’t qualify for traditional financing, so investors need to be careful before parting with their money. However, the investor can decide the credit rating for a borrower, and choose whether to fund or not. There are excellent peer-to-peer lending platforms online.

  1. Equity Crowdfunding

Equity crowdfunding came about with start-up companies who need money. These companies offer shares of their companies on sites solely dedicated to equity crowdfunding. If an investor buys a share of the company, he or she will be rewarded accordingly if the company succeeds. When an individual invests in startups that they believe in, they can potentially grow their wealth if the company makes money. In equity crowdfunding, individuals usually invest in an early-stage company that is not listed on a stock market, and they become a shareholder with partial ownership of the company.

The risk of this investment is if the company fails, then the money is lost. With just a few hundred dollars, you can already put your money into equity crowdfunding. Investment opportunities are open to everyone. There was a time when only wealthy individuals and venture capitalists could put money in startups. Equity crowdfunding platforms have democratised the process by including a larger pool of potential investors.

These alternative investments will yield solid returns if done properly and prudently. From investing in real estate and precious metals, backing or staking online poker players, engaging in peer-to-peer lending and equity crowdfunding, the investment lesson to be learned here is to stay diversified. It is not a good idea to over-invest in one alternative asset because it has the potential to damage an entire portfolio. Another important thing to consider when you start thinking about alternative places to put your money is to stay away from get-rich-quick schemes. Just stick to legitimate investments.