5 Investment Alternatives to the Stock Market

Despite double-digit growth in the rebounding stock market thus far in 2021, some cautious individuals want investments other than stocks to balance out their portfolios. Fortunately, there are several other ways to invest your money, such as buying gold or exploring technology-based investments like crowdfunding. While there are many investments outside the stock market, here we’re covering the top five options with the greatest potential for return while taking on acceptable risk.


1. Rental Property Investing

Wondering how to make your money grow without investing in Wall Street assets? Rental properties have gained in popularity in recent years. Home prices are soaring due to a spike in post-COVID-19 house hunting. Rising costs, like skyrocketing lumber prices, mean you may want to buy now, even if you plan to move in later. 


Renting out a new home property can help you make some money back and cover the mortgage during that waiting period. You can even hire someone to manage the property, and renting out long-term or scheduling vacation rentals through Airbnb (or a similar platform) can help ease some of the hassle of finding a suitable tenant.


While properties typically appreciate in value (especially right now!), there’s a higher entry barrier in real estate for those looking for investments other than stocks. Some warnings include:

  • It takes more money to get into this kind of investment, so you'll have to save for the down payment
  • You need to factor in maintenance costs to keep up the property
  • You should think about covering the mortgage in your monthly expenses to ensure you set the rental price accordingly

On the plus side, those with plenty of cash looking for stock market alternatives can buy distressed or short sale properties and fix them up to sell for a profit. But if you’re sure you want to become a landlord, it may be comforting to know that lower home ownership across the nation, as analysts are predicting, may make finding long-term renters easier.


2. Gold

Still not sure what to invest in besides stocks and real estate? Gold is one of the most popular alternatives to stock market investing today. Historically, when stock prices plummet, gold prices tend to climb, making this asset a great way to balance out your portfolio. With the cost of gold exceeding $1,800 an ounce today, it may even be possible to build a lasting legacy for future generations.


Investing in physical gold gives you a tangible asset, which some investors prefer. It’s valued universally by all cultures and has practical uses as decorative items or jewelry made of solid gold. Keep in mind that it’s harder to store and secure gold, but if you want alternative investments to stocks that won’t decrease in value, buying gold can diversify your wealth generation strategies. So, it might be one of the smarter alternatives to investing in the stock market.


3. Investing In Yourself

Remember that age old saying: It takes money to make money? Non stock investments in training or education can increase your income even though you won't make money off of your investment in the traditional sense. Of course, you could look for grants and scholarships to offset the cost of classes. This isn't one of the most obvious investment ideas other than stocks. However, it can help you turn your passion into a career.


If you’re willing to invest time and money in an investment other than stocks, modern technology (and the pandemic) have made remote work viable for more and more people and industries. There are so many side hustles you can do in the privacy of your own home. Some of them can pay off big time after you establish a client base and start getting referrals. The convenience of this stock market alternative, combined with positive quality of life improvements, could potentially make this one of the best non stock investments out there. 


You can also start your own business in a more literal sense. From buying a franchise to opening a retail store, there are many options for investors who want financial independence.


4. Peer-to-Peer Lending

Investments other than stocks also include peer-to-peer lending (P2P). Sometimes referred to as crowdfunding, peer-to-peer lending offers numerous opportunities to join others in lending money to individuals and businesses online. This stock alternative often yields higher annual returns than stocks and bonds. It's easy to shop for reputable P2P platforms. However, it can be risky. Unlike most other forms of investment, you stand a decent chance of losing your principal if borrowers default.


For investors who want to help underserved communities, microloans offer a hand up and, when the deal goes well, can result in high returns.


5. Crowdfunded Real Estate

Crowdfunded real estate is one of the most interesting alternatives to the stock market. Few other non stock market investments give you the ability to literally watch your investment grow. It also has a low entry barrier, making it an ideal opportunity for those just getting started in the world of investing. You can even find some crowdfunded real estate opportunities that require just a few hundred dollars minimum investment.


Real estate crowdfunding involves a group of investors who raise capital for a single real estate project. This cash infusion allows investors without significant capital to flip a home, buy a commercial office building or buy and renovate a rental property, for example.


The JOBS Act made private equity investment accessible to investors from all walks of life. Still, many crowdfunded real estate opportunities require accredited investors to prove they have at least $1 million in net worth or an annual income exceeding $200,000 (this amount goes up to $300,000 for married partners). It may take more time and effort to find crowdfunded real estate opportunities for nonaccredited investors. However, some investors find it very satisfying.


Some online platforms make it easier than others for investors to get started. Learn more about how this type of investing without stocks works when you partner with Connect Invest. 


Where Do You Start?

These five top alternative investment options give you a few ideas for diversifying your portfolio. It's important to think outside the box when it comes to building your wealth and legacy, especially in today's volatile economic environment. Alternative investment ideas like crowdfunded real estate, investing in yourself, peer-to-peer lending and more let you personalize your investment strategy, diversify your portfolio and maybe even give back to struggling entrepreneurs. 


Take your time and consider your long-term goals before you choose from these diverse investment strategies. Even if you continue investing in the stock market, it's always a good idea to also consider other ways to invest


Does real estate sound exciting to you? Connect Invest offers crowdfunded investment opportunities that can help you get started in the lucrative world of investing in real estate today. Learn more by checking out our listings!


The material contained herein does not constitute an offer to sell or a solicitation of any offer to purchase these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. Offers for the sale of these securities will only be made to investors, who meet certain suitability standards, pursuant to the Connect Invest Corporation Confidential Private Placement Memorandum (the “Memorandum”). Investments in these securities are not suitable for all investors. Investments involve a high degree of risk and should only be considered by investors who can withstand the loss of their entire investment. Prior to purchasing any of these securities, prospective investors should carefully review the Memorandum, including the “Risk Factors” section, and any supplements thereto. Investors should perform their own investigations before considering an investment in these securities and consult their own legal and tax advisors.

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