If you believe the stock market is overrated, you are not alone. Many people believe that sometimes the stock market can be incredibly volatile – which is not a bad claim regarding the nature of the stock market.
This is because many people seek different types of investments that don't involve the stock market. These investments might not be as rewarding as the stock market, but they are safer and more reliable.
Let's look at 12 of the most common investments that don't involve stocks. But you must remember that every investment vehicle comes with its own risks, so do your research before you start investing.
1. Real Estate Investment
Think of real estate investment as owning a piece of land or a house. You buy it, and then rent it out to someone (earning you a steady income) or sell it when its value goes up (giving you a nice profit).
Real estate has always been a popular and profitable form of investment. You can buy the property yourself or join one of the many real estate investment trusts that allow people to pool their money together and invest in real estate.
These investments are pretty safe and can offer excellent returns if done right.
2. Peer-to-Peer Lending
Peer-to-peer lending is basically where you lend money to people or businesses who need it. You get the repayment (with interest) from these borrowers in return.
Peer-to-peer lending is mostly done through online platforms that match lenders with borrowers and then take a percentage of the interest earned by the lender.
The returns on peer-to-peer loans are usually higher than those of traditional banks, and it's a great way to diversify your portfolio without investing in stocks.
However, there are some risks associated with this investment, so do your research before you start investing.
3. Certificates of Deposit (CDs)
When the U.S. government backs something, it's usually a safe bet. CDs are one of those investments – they are insured by the Federal Deposit Insurance Corporation (FDIC).
You loan your money to a bank, and for that, the bank offers you an interest rate in return. The longer you invest your money, the higher the interest rate you'll get.
And while CDs offer relatively low returns compared to other investments, they're great if you want a safe and secure investment with guaranteed returns.
4. Investing in a Business
Startups and small businesses are always looking for investors. If you are willing to risk and invest in a business, you can make good returns.
You become an investor in the business and get a share of the profits. This is usually done through equity investment – where you buy shares in the company.
Investing in a business can be a great way to make money, but it also has its risks. So do your research before investing your money into any venture.
5. Precious Metals
Over time, precious metals such as gold, silver, and platinum have shown to be an excellent long-term investment.
These investments are stable and don't have the same degree of volatility that stocks might. Plus, they are generally more resistant to economic downturns.
You can invest in these metals by buying physical gold or silver bars, coins, or ETFs (exchange-traded funds). You can even buy jewelry made out of gold and silver, which can be a great way to diversify your investments.
6. Commodities
Commodities are essential goods that can be interchanged with goods of the same type. These are things like gold, oil, coffee, or wheat. Investing in commodities means you're betting on these goods' prices.
For example, if you think the price of gold will go up, you buy some now and sell it later at a higher price. It's a way to diversify your investments, but remember, prices can be volatile and depend on weather and global politics.
7. Bonds
Bonds are debt instruments issued by companies or governments who want to borrow money from the public. When you buy a bond, you lend the issuer money for a certain period of time, and they pay you back with interest when that term ends.
Bonds are typically considered safer investments because there is less risk than stocks. Plus, bonds offer regular income in the form of interest payments.
However, the returns on bonds are usually lower than on stocks. So it's essential to weigh your options and decide whether this investment is right for you.
8. Mutual Funds
Mutual funds are a popular investment choice, and it's easy to see why – when you invest in a mutual fund, your money is pooled with that of other investors. A professional manager uses this pool to buy a diverse mix of stocks, bonds, or other assets.
This allows you to own a small piece of many different investments, spreading out risk. It's an excellent option for those who want to invest but need more time or knowledge to manage their portfolio.
9. Cryptocurrencies
Even though the value of cryptocurrencies has decreased over the past year, they are still viable for those looking to diversify their investments.
Cryptocurrencies have been known for their high volatility, which can be risky. But if you time it right and stay informed about the market, you could make decent returns on your investment.
For example, bitcoin used to cost just a few cents when it was introduced, and now it is worth thousands of dollars.
10. Art and Collectibles
Art and collectibles are known for their potential to appreciate value over time. Investing in these objects is a risky venture, but if you do your research and have an eye for quality, you can potentially make some great returns.
Buying art and collectibles is also a fun way to invest – you get to own something unique that you can enjoy looking at and showing off to others.
11. Forex Trading
Forex trading, also known as foreign exchange (FX), is buying and selling currencies. Forex traders try to take advantage of exchange rate changes to make a profit.
This type of investment can be risky and requires a lot of research and knowledge of the markets. For those with experience, however, diversifying your investments and making some good returns can be a great way.
12. Crowdfunding Real Estate
As mentioned in the first point, real estate is a great investment method. But if you don't have the money to buy a property outright, there's another option – crowdfunding.
Crowdfunding real estate is when multiple investors come together to fund a real estate project. It's a great way to get involved in the real estate market without investing too much money.
Plus, it can help you diversify your investments – since you're investing in multiple projects at once, if one project fails, you still have other investments to keep your returns stable.
Many Investment Options
No matter what type of investor you are, you have an investment option beyond the stock market. From commodities to real estate to cryptocurrencies and more – it's essential to do your research and choose the suitable investment for your needs. You can make great returns and diversify your investments with the right approach. So start exploring what's out there today!
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I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.
