Career Advice - A Community Blog

Erik Larson writes about the job market, resume improvement, and career advice

Thinking Outside The Stock Market With Alternative Investments

Written by Erik Larson, Community Blogger | Sep 26, 2017 6:38 PM

Most investors prefer to put their hard-earned dollars in the stock exchange before thinking about any other avenues. Before the stock, there were physical markets where trading took place with a minimal focus on investment. However, in the current times, the market can be accessed electronically where buyers and sellers can place orders through a broker. The markets have grown to be the most attractive investment option due to these advances. 

Companies use primary markets to introduce shares to the public in what is popularly known as an Initial Public Offering (IPO). The shares can be traded and exchanged in a secondary market at the current price. This trade is regulated by a security exchange formed by the government of the country in which the exchange is taking place. While all this is relatively straightforward, the stock is not the only place where you can boost your investments. 

1. Consider Contracting For Difference

If you are an investment risk taker, you might Contract for Difference (CFDs). A CFD is an instrument that can be traded solely because of its movement along the price a trade is entered and exited. Nevertheless, CFDS typically involve high levels of risk and tend to yield proportional profits. Like the stock exchange, these investment options have brokers who tend to handle the technical aspects of the trade for the investor. 

The ability to predict the movement of assets that are most tradable will result in either a profit or a loss. Additionally, it is important to note that CFD is a contract between the client and the broker and cannot be owned. At the same time as an experienced trader, you can trade in more than one item including stocks, currencies, commodities indices and bonds. Another advantage of CFDs is that most brokers never charge a commission; giving the client a chance to make more money by controlling how much can be lost.

2. Treasury Bonds

Treasury bonds are a low-risk investment and a good alternative to the stock market. Anyone can invest in treasury bonds since there are a few barriers to ownership. The interest earned is small compared to most investments out there, but, with very minimal risks. The principal that you invest is held in a fixed account but allowed to earn interest. Most governments offer bonds to their citizens to raise money to supplement the budgets.

3. Peer to Peer Lending (p2p)

This alternative way of investing has gained popularity quite fast over the past several decades. Using P2P, lending as an interest-earning investment is way usually more profitable in comparison to bonds. It is known that P2P loans perform better than the stock market during most regional economic downturns. However, if you are considering this option, you should be warned that you risk the loss of your capital when individual borrowers fail to pay as required. Overall, lost investments have some level of risk. If you are an experienced investor, the manner in which you optimize your portfolio will determine your profitability. 

4. Precious metals

Owning precious metals is a common but lucrative alternative to stock market investment. Gold is the most common element in metals investment. It is a tangible investment and is valued highly by most cultures around the world. Until recently gold was the highest currency in value when exchanged with the world's currencies such as the dollar or the euro. However, bitcoin, a cryptocurrency has overtaken gold by quite a significant margin. However, gold is still valuable, especially to the technology skeptics.

5. Collectibles

Collectibles include items such as wine, art, vintage cars, historic memorabilia, and comic books. These collectible assets have recorded growth in value over the years. To make money in this form of investment, knowledge of what to choose is essential. Lack of knowledge could lead to an investor being shortchanged. A sizable initial investment is also required in this undertaking compared to other alternatives. 

6. Real Estate

Real estate gives you an opportunity to buy and sell property. It could be as simple as the purchase of a rental property and a lease to tenants. Some people would consider buying land and later developing the property themselves with the help of a financial institution or a real estate developer. Most banks have investment platforms specifically tailored for the real estate sector.

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