For a long time, most investors have chosen to put their money in stocks hoping for great returns. Unfortunately the stock market may not be the most lucrative option when it comes to investing your money. Following the financial crisis that rocked the entire world, many investors are running scared as the prices of stocks plummeted.
As is expected, there is a myriad of options for the keen investor out there. The only question that remains is; are these alternatives safe? Can these alternatives churn out worthy returns? Are the alternatives cheaper or more expensive in the long run? Most investors are drawn to these alternatives because they promise no relation with or dependence on the stock market and its disappointments. Here is a look at some of these investment opportunities.
Why Alternative Investment?
A good investor must ask themselves this question before committing their money to anything. Well, alternative investments seek to either reduce risk for an investor or boost returns. Most investors are still recovering from the huge losses of 2009 and it is precisely because of this that they seek a safer, more lucrative option. Some of the most attractive alternative investments are listed below. However, you need to be careful when making any deal as some options are too risky.
Art Related Investments
After the turbulence experienced in the stock market in 2009, many investors who are die-hard traditionalists have finally thrown in the towel. Investing in things like art is becoming a very common trend especially if you are looking for a long term venture. The Knight Frank Luxury Investment index places art in very good stead showing up to 226% return on investment in just ten years. True, a shorter period of say five years will not duplicate such success but this is only because art is not appreciated as much as it should be. It is certainly catching on though. Experts in the investment industry recommend 19th century European art which gives a resounding 20% return in just one year.
Investments directly into businesses in form of equity crowd funding or business angel investment is picking momentum. Since your returns depend on the success of the venture, there is a chance that you can lose money, but the rewards can be considerably high with a successful business. As an investor, you get to enjoy a bigger share of the profits as opposed to earning just dividends from shares. Apart from having better returns, these investments also attract considerable tax rebates.
Other Lucrative Investments
Other less traditional alternative investment options for those looking for high payoffs in the long run include jewellery, stamps, gold, cars, coins and even good old wine. Although such alternative investments can be challenging to value, they can give quite irresistible returns.
Cars in particular are becoming a popular choice for investors who are willing to put in hefty amounts. With a 25% return on investment in just one year, this is already a refreshing option compared to the fluctuating stocks. One can expect upwards of 469% returns on cars investments in a period of ten years. If you have the patience to wait, you can make a killing not just with cars but with all the alternatives mentioned here; yes, even with controversial gold.
The Importance of Proper Research
As an alternative investor you must have a keen eye and a high affinity for properly researched statistics. This is necessary before taking the plunge into some of these alternative investment options because not all cars or all wines will give you the projected returns. The alternative investment playing field is no place for simplistic generalisations. You cannot assume that every classic car will increase in value over the years. Not all wine brands will boost the value of your cellar in a few years. Some simply just fall off by the wayside. Consulting with experts in each industry is important. Investors are also depending heavily on related indices to establish trends before placing stakes on their hard earned money.
The New Wealth Phenomenon In 2016
Statistics indicate that there is a lot of wealth being created all over the world in different continents including Africa and Asia. What this means for the market is that a new breed of investors armed with new money is out there waiting to affirm their status with the “right car”, the “right wine” and donning the “right jewellery”. The need to uphold status creates room for investment and if you do your research right, you might just hit the jackpot in a few years. The trick with alternative investment is not to place all your bets on the first option you come across.
Some informed speculation is necessary at least to the extent that you spread out your assets across a few good alternatives. Going all in can be detrimental if projected returns are not realised. Blind investing is another cause of failure for most people. Going forward, experts say that many investors are already expecting heavy blows like those they were handed in 2008/2009. To keep this from recurring, every investor has to look for alternatives whose benefit to their portfolio they truly understand.