The 4 Best Alternative Investment Strategies

Everybody knows that you need to have a diverse portfolio to hedge yourself against an economic crisis. The more you spread out your risk, the better. The one problem is that many people simply make the same type of investments and consider that spreading out the risk.

While that can be a valid strategy, there is another strategy that often goes ignored. Alternative investments are an excellent way of spreading out your risk since they are not always as affected by the stock market or economy as a whole.

Some of these types of investments are an excellent way to park your assets to protect them from a turbulent market. Or, you could be looking for some good income asset examples that pay you dividends that you can live off of even when the economy is not looking good.

In this article, I will go over several alternative investments that may seem strange but could prove to be the insurance that you’re looking for when it comes to protecting your money.

1. Wine shares

 Yes, wine is a commodity just like many others with one exception. There are people that will pay top dollar for a rare wine to complete their collection. Not all wine is meant to be consumed. Some rare vintages are simply for some people to show off.

When you consider that there is only a finite amount of wine in the world and of that a very small amount is considered fine and collectible, you can then understand how it has such a high value.

If you’re a wine buff and love the finer things in life then this could be an investment strategy that gives you a lot of pleasure in addition to the dividends. It’s not at all necessary to be involved in the wine world or even like to drink it for this to be a sound strategy, however.

You can simply invest in wine stocks just as you would in any other commodity. There are wine investors with whom you would buy shares and then get your returns just like with any other type of investment like housing shares or something similar. 

2. Fine art

 They say that money doesn’t create taste. Why is it, then, that so many wealthy people have a lot of artwork? Did they suddenly become connoisseurs once their bank account hit a certain amount?

Though many people will develop a love for art as they mature, the simple answer to those questions is that they are buying fine art as an investment and not just because they like how it looks in their living room.

Just like with wine investing, you don’t need to appreciate art or want to have it in your home or safe. You can also buy shares in fine art in which you purchase a fraction of the value of a particular artwork. This makes it affordable for anybody to invest in art.

If you do have the means, however, going to a high end auction and buying a rare piece can be quite a thrilling experience and may also look great in your home.

3. Commercial real estate 

Buying real estate as an investment may not seem like an alternative strategy since it is as old as time itself. For millennia, people have been buying up property and selling it for a profit.

The difference here is that you are buying shares in commercial real estate development and not buying the actual properties yourself. This spreads out the risk and you aren’t supposed to be an expert on the type of property or timing of the buying and selling.

It’s just like buying shares in a company and then collecting dividends from the profits. If you did buy the property yourself and rent it out or try to flip it then you could make a bit of passive income but likely you’re going to just have a place to park your money for a while to protect it. Buying up commercial real estate during an economic downturn means that the property is not exactly liquid. Which is why real estate shares are more attractive. You can sell them whenever you want.

4. Investing in startups

 This is possibly the most volatile of the strategies suggested in this article. If you are not risk averse, it could be a very good way to make a considerable amount of money. Being on the ground floor of a winning startup could be the equivalent of being one of the first investors in Microsoft or Apple back in the day.

Be sure to understand the industry the startup is in and be an expert on what the company seeks to achieve. If you know nothing about tech, then buying initial shares of a software company is probably not a good idea.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.