New to investing? Check these 5 alternatives to stocks, bonds
What's the story
Alternative investments are becoming increasingly popular among novice investors hoping to diversify their portfolios beyond traditional stocks and bonds.
These investments can provide unique growth and income opportunities, often with different risk profiles than conventional assets.
For those new to investing, it's important to know the basics of alternative investments.
Here are five common options beginners could explore as they begin investing.
Property ventures
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts, or REITs, enable people to invest in large-scale real estate portfolios without actually owning properties.
They usually pay dividends and can be a source of steady income.
As REITs are traded on major stock exchanges, they are easily accessible for a beginner investor.
They give exposure to real estate markets without requiring much capital or property management.
Direct loans
Peer-to-peer lending
Peer-to-peer lending platforms match borrowers with individual lenders willing to fund loans in return for interest.
By lending small amounts across multiple loans, beginners can earn returns through this form of investment while minimizing risk.
The interest rates may differ according to borrower creditworthiness but generally provide better returns than conventional savings accounts.
Tangible assets
Commodities
Investing in commodities means buying physical goods such as gold, silver, or agricultural products.
These tangible assets can serve as a hedge against inflation and currency fluctuations.
Beginners may invest through commodity-focused mutual funds or exchange-traded funds (ETFs) which give you exposure without having to store physical goods yourself.
Collective funding
Crowdfunding platforms
Crowdfunding platforms allow people to invest in a start-up or project by coming together with other investors.
This way, novices get an opportunity to back some innovative ideas and earn returns if the venture pays off.
However, it is critical for first-timers to know that many start-ups may not make it big, and hence, the risk involved.
Unique investments
Art and collectibles
Art and collectibles make for another alternative investment avenue where people buy items like paintings or rare coins with the hope of their value appreciating over time.
Although this market entails a bit of knowledge about worth and trends of particular items, it gives a chance to diversify beyond financial markets for those interested in unique assets.