When people start thinking about retirement and investing, stocks and bonds may be the obvious assets that come to mind. These investments have a long history of providing ample wealth and retirement funding. However, there are downsides to note.
With stock-heavy portfolios, you are obviously at the mercy of the stock market. An unexpected world event can send your stock values into freefall. And the older you get, the less time there is in your life for those values to recover. Bonds are much more stable, but interest rates have been low over the last several decades. Therefore, bonds may not offer you the growth you need.
So what else is out there to round out your portfolio, possibly? You might be surprised at the wide range of alternative investments available. By doing your due diligence on risks and potential for each type of asset, you can find something to suit your purposes. Here are three investment possibilities outside the stock market to consider adding to your portfolio.
90%. While research into a startup can give you an idea of its potential for success, it’s still a gamble. Also, your money will likely be tied up for several years with limited options for getting it out.
But for some investors, that risk is worth the reward. If you pick a winning company, getting your money in the hopper at the seed stage can yield big returns. Not only that, but some investors get emotional fulfillment from their money, helping the next generation of entrepreneurs become successful.
And with modern technology, you don’t have to be a bigwig in a boardroom to be a venture capitalist. Various crowdfunding sites advertise startups looking for investors. Just know that throwing a thousand dollars at a few interesting businesses will unlikely give you an impressive return. Sending $50 to a board game company in exchange for an item from their first run will not improve your portfolio.
To make startup investment a wealth-building activity, you must thoroughly research the company and contractual terms. If you are not fluent in legal documents and business concepts, make sure to hire someone who is before signing and investing.
real estate investments is that they can mitigate damage from stock market crashes. Commercial real estate typically correlates to the stock market, but residential real estate does not necessarily follow this trend. So if your portfolio is currently very stock-heavy, consider purchasing residential rental properties over time. You should have consistent rental income to stay afloat even if your stock values plummet.
Another perk of real estate is having as little or as much involvement as you would like. To save money, you can perform administrative tasks yourself. This includes action items such as scheduling maintenance, rent collection, and performing background checks on applicants. If you’re comfortable with losing some revenue to fees, you can consider hiring a real estate management company to oversee your properties.
3. Other Commodities
The term “commodities” sounds somewhat technical. Essentially, it just refers to a category of assets relating to raw materials. This encompasses many industries and materials, from precious metals to grain futures.
With this large range comes the need for additional consideration before you invest your money. Finding an advisor is essential unless you’re very knowledgeable considering inves. Your advisor should be able to tell you the risk level of each item and its correlation with stock fluctuation.
A major perk of investing in commodities is that most of them rise in value whenever inflation occurs. Gold, lumber, and energy have typically performed especially well during periods of high inflation. Since stocks and bonds do not function similarly, things can be valuable in rounding out your investments.
Fine wine and art can be more than bragging fodder at your next dinner party. With the limited availability of these items, they can increase significantly in value over time.—therEvenetcategories of outside-the-box commodities purchased as legitimate investments.
Protect Yourself From the Unexpected
Whether you’re just researching investing or consider yourself an old pro, it doesn’t hurt to see what’s out there. If you limit yourself to a standard split of stocks and bonds, your portfolio might fall short of its full potential. By looking into alternative investments, you can set yourself up for a stable financial future protected from unexpected events.
