In times of low-interest rate policies, it’s becoming increasingly difficult to achieve substantial returns with traditional forms of investment. It’s, therefore, no wonder that many people are on the lookout for new ways to invest. When it comes to alternative investments, there are countless opportunities for a good return. Including the usual alternative investments like private equity and hedge funds, there are various other interesting ways to diversify your investment portfolio. In other words, you’re spoiled for choice.
That being said, finding the ideal alternative investment can be a bit tricky and will require a financial advisor. However, you must do your due diligence first to prevent future disappointments. To help you get started, we have listed five of the best alternative investments in 2020.
Time and again, the purchase of properties to rent out has proven to be one of the best alternative investments. A real estate investment offers direct interest and regular rental income which is your steady passive income. It’s also worth mentioning that a real estate investment offers a high level of security and is (usually) protected against inflation.
More so, there are various tax advantages that come with this alternative asset, which also makes it a source of income when you’re older. If you invest wisely, not only will you get a good return from the rental income, but you can also look forward to an increase in value.
Despite the good returns, you shouldn’t buy just any house or apartment because you can only get attractive rents in high-value areas. If you’re not sure where to purchase a property, seek help from experts like Yieldstreet, an alternative investment platform. The company offers access to unique income-generating investments. With their help, you can invest in financial assets backed by collaterals. You will also be assigned a portfolio manager whose expert knowledge is vital to ensure you can confidently make good returns.
Affordable and profitable at the same time, precious metals are the classic alternative investment. More so, they’re relatively crisis-proof. The sheer “purchasing power” of gold, for example, has remained constant over the past 100 years. However, when you invest in commodities such as gold, you will rarely get significant returns. Gold investments work best if you want to diversify your portfolio with a product that maintains value over the years.
Vintage cars are a “hit” for car lovers. They’re a relatively safe investment and can yield high returns, depending on the model. Certain vintage vehicles, especially those that are rare and still in good condition, offer an excellent chance of returns. We’re not just talking about the flashy Ferrari or Porsche. Even a 1965 Ford Mustang continues to gain value year after year.
Open-end funds are classic investment funds that you can trade on the stock exchange. You can buy units at any time and sell them at the current redemption price. Entry is possible with relatively small amounts of money, which makes an open fund interesting for small investors. With a return between four and six percent, a fund management team will professionally manage your investment.
To minimize the risk of loss, you can spread your investments across different companies. However, they all come with their own regulations. Some state that you must hold open funds for at least 24 months after purchase, while others are more lenient. Also, when making your investment, be sure to consider the costs and fees for the fund management team. These fees can significantly reduce the return, as can any transaction fee.
This next alternative investment is a traditional form that is very popular despite the low-interest rates. A savings account is a good way of depositing money securely in a bank and saving it up for emergencies. However, this is not suitable as a long-term investment that is supposed to generate a high profit.
The interest rates vary and depend on the rates offered by the bank. It’s often only between 0.01 and 0.5 to a maximum of 1% per annum. Some banks even paying less than this. Bottom line? Do your research.
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