Source: Unsplash | Chris Liverani
Buying and selling stocks and mutual funds are the most common retail investments. They are made by investors of all ages, wealth and experience levels. But there are several alternative investment vehicles available as well. Some of them can come with higher rates of risk. But they can also expose investors to new sectors and the profits and/or losses that might come along with them. Here are six alternative investments that you should think about for the rest of 2019 and beyond.
P2P (peer-to-peer) lending is an online lending program designed to connect investors who want to lend money with people who want to borrow it. It has grown in popularity because of the relatively high yields that investors can earn on their cash. Further, most platforms allow relatively small initial investments – often under $500. The default rates can vary depending on the provider. In most cases, as well, investors can choose the level of risk they want to face. The most well-known P2P lending sites are Prosper, Lending Club, Upstart and Funding Circle.
Foreign exchange (forex) trading requires participation in the world’s largest market: currencies. Investors look for arbitrages – or price differences – in various currencies such as the US Dollar or the Japanese Yen and place bets on them. Forex trading will often require constant attention to one’s portfolio. Investors are frequently forced to pay attention to major international events and government fiscal policies that could impact the value of a currency.
Mortgage lending usually requires larger sums of capital to begin with. But if you have cash on hand, then you may be able to earn income while having security in real estate. According to Alexis Assadi, the CEO of Pacific Income Capital Corporation, when done carefully mortgages can offer strong risk-adjusted returns to lenders.
While mortgage lending can be profitable, given the nature of real estate, it will typically require the involvement of at least one attorney. It is often not an investment that can be made with the stroke of a pen or a click of a button. If you are considering this asset, then you should expect at least a week or two before it can be completed.
Equity crowdfunding connects business owners who need capital with retail investors who are interested in startups. In some respects it is similar to P2P lending. However, equity investors are not lending money so they are not entitled to get it back or to receive interest payments. In theory, though, there is more potential for large gains if the project is successful. Common equity crowdfunding sites include SeedInvest, Angelist and CircleUp.
Data Center Real Estate
Data centers are physical locations used to house information collected and stored online. They provide support for several services, including cloud storage. Companies like Google, Microsoft, Oracle and Amazon invest in millions of square feet of data centers each year. Many analysts believe that data centers represent a significant future of real estate as goods and services continue to go digital.