Investing in stocks is a well-known method of building wealth, but it’s important to diversify one’s portfolio beyond the stock market.
Alternative investments, also known as “alts,” have become increasingly popular among ultra-high net worth investors, who allocate nearly 50% of their wealth to these assets.
In this article, we will explore five alternative investment options that offer high returns on investment (ROI) and discuss their pros, cons, potential returns, time commitment, minimum investment, and the best platforms to invest in.
1. Rental Homes
Rental homes are a lucrative alternative investment option that offers passive income, diversification, and capital appreciation.
While it is an illiquid and long-term investment, the potential returns range from 3% to 40%+.
Investing in rental homes typically requires a time commitment of five or more years, with a minimum investment of $100.
Arrived is considered the best platform for investing in rental homes.
2. Fine Art
Investing in fine art provides low volatility, open access for all investors, and acts as a hedge against inflation.
However, it comes with long lock-up periods, a confusing fee structure, and lack of regulation in the industry.
The potential returns for fine art investments range from 8% to 30%+.
The time commitment usually spans three to ten years, and the minimum investment starts at $500.
Masterworks is a recommended platform for investing in fine art.
3. Farmland
Farmland investments offer low volatility, low fees, and act as a hedge against inflation.
However, they are highly illiquid, lack secondary markets, and are only available to accredited investors.
The potential returns for farmland investments are typically 11%+.
The time commitment ranges from three to eight years or more, with a minimum investment between $10,000 and $25,000 (and possibly as high as $40,000).
FarmTogether is the top platform for investing in farmland.
4. Wine & Whiskey
Investing in wine and whiskey offers low volatility, acts as a hedge against inflation, and is considered a real asset.
However, it is an unregulated industry and requires a long-term investment commitment.
The potential returns for wine and whiskey investments range from 12.4% to 100%+.
The time commitment can span from two to twenty years or more, with a minimum investment of $300.
Vinovest is a recommended platform for investing in wine and whiskey.
5. REITs (Real Estate Investment Trusts)
REITs provide diversification, passive income, and capital appreciation.
However, some REITs may charge high fees and are subject to volatility.
The potential returns for REIT investments range from 7.31% to 22.99%+.
The time commitment is typically five or more years, with a minimum investment of $100.
Fundrise is considered the best platform for investing in REITs.
The Bottom Line
Alternative investments were once exclusive to the ultra-wealthy, but advancements in technology have made them accessible to a wider range of investors.
However, it is crucial to note that past performance does not guarantee future results, and thorough research is necessary before making any investment decisions.
Remember, diversifying your investment portfolio with alternative assets can help you achieve higher returns and mitigate risk.
Consider your financial goals, risk tolerance, and investment horizon when selecting the best alternative investment options for your portfolio.
Your bank account will thank you later!
