Investment Ideas: 10 Alternatives To Stocks

You can make a lot of money investing in the stock market. However, stocks and shares aren’t for everyone. Disasters such as the coronavirus pandemic have shown just how volatile the stock market can be. For others, it’s not so much the risk but the lack of tangibility that puts people off of stocks – some people like an investment that they can touch and feel.

Fortunately, there are many alternative investment strategies out there for those that don’t want to get involved in stocks and shares. Here are just ten alternative investment ideas to consider, their benefits and how you can get involved.**

Savings accounts

Savings accounts are the most low-risk form of investment. While interest rates can change, you’re never going to lose your money, which makes them a secure option. They can however be slow forms of investment – you may only make a small return each year.

When choosing a savings account, always shop around to find the best interest rates. The highest interest savers often come with conditions such as contributing a certain amount of cash each month or having a minimum balance in order to get paid interest.

Bonds and CDs

Bonds and CDs are alternatives to savings accounts. Bonds are effectively loans given out to companies, state officials or the government – when the bond reaches its maturity date, you are paid back your money along with interest. A CD (certificate of deposit) is usually issued by a bank and similarly cannot be accessed until it reaches its maturity date, after which you are paid back your money with interest.

Both bonds and CDs tend to offer a greater return than savings accounts while still offering the same low level of volatility. Like savings accounts, it is worth shopping around for bonds and CDs. They can be useful for investing money that you don’t want to touch for an extended period (unlike a savings account, which you may be able to still dip into).

Forex trading

Forex (foreign exchange) trading is a form of investment that involves buying and selling currencies. Because currency values are constantly fluctuating, it’s possible to buy a currency that is rising in value and then exchange it into another currency at a profit.

You can trade foreign currencies with the help of a broker. Different brokers offer different accounts with different minimum deposits – so it’s worth shopping around. Many people are day trading forex, which can be a way of making a quick return. There is a certain level of risk to forex trading, so it pays to do your research into currency value forecasts, as well as understanding how current world events may affect currency rates.

Cryptocurrency

There are a number of digital currencies out there such as Bitcoin, which are known formally as cryptocurrencies. These can be traded in a similar fashion to real currencies – each cryptocurrency has its own value and these values are similarly changing all the time.

You can buy cryptocurrencies using a cryptocurrency exchange. It’s worth then storing your cryptocurrency somewhere safe such as a hardware or software crypto wallet. Cryptocurrency is still in its infancy and many investors are still working out how to predict rises and falls. It can be highly volatile, but it can offer large and fast returns.

Peer-to-peer lending

Peer-to-peer lending involves lending money to another individual online. The borrower then pays back this loan with interest, allowing you to make a return. The more you are able to lend and the longer you are able to lend it for, the more of a return you can make.

It is best to go through an official peer-to-peer lending site. This allows you to shop for causes that you think are worth lending money to. Such sites may also offer protection if a debtor defaults on payments, so that you don’t lose your money.

Domain names

A number of investors have also started investing in domain names (AKA web addresses). Certain domain names can become valuable over time making it possible to sell them at a profit. An investor may buy multiple domain names as a way of increasing their chances of earning money from one.

There are sites set up for buying and selling domain names. ‘.com’ addresses tend to be the most valuable. Domain names containing key words and phrases also tend to fetch a lot of money. It’s worth doing some research into domain names to understand what makes a certain web address likely to become valuable.

Real estate

Real estate is one of the most popular and established forms of investment. This involves buying a property or land and then either a) renting it out in order to make a return or b) developing it and selling it for a higher value.

When it comes to renting out real estate, the most popular option is buy-to-let residential property. This involves owning a property and renting it out to tenants. As landlord, it is your duty to still make repairs and necessary improvements. Some landlords will pay a property manager or agency to handle this for them as well as possibly sourcing new tenants.

There are other forms of renting out real estate that you can look into such as commercial property rental, vacation home rental, event space rental or even allotment space rental. These tend to be a little more risky and hands-on than residential buy-to-let investments, but can yield potentially higher returns.  

Developing property and selling it at a profit is a faster way to make a return and is known as property ‘flipping’. This could involve hiring contractors to develop a property or making development yourself if you’re DIY-savvy. The trick is to spend a minimal amount of money improving the property, while adding as much resale value as possible (improvements such as adding an extra bedroom or updating an old bathroom or kitchen can add a lot of value).

Collectibles

A number of collectible items can make great investments. A few popular examples include old coins, collectible toys, vinyl, books, art and sports merchandise. Fellow collectors may pay a large sum for these collectible items – generally the rarer the item and the better condition it is in, the more valuable it will be. 

To invest in a collectible item, you generally need to have a passion in that collectible yourself. A deep knowledge will help you to figure out which items are valuable and which aren’t so valuable. Paying someone to authenticate collectibles could be useful in some cases as there are a lot of fakes out there. You can buy collectibles online, at antique stores or at conventions. 

Wine

A lot of people also invest in wine. A rare and reputable vintage can be worth a lot of money if you’re able to find the right buyer. You could invest in a single bottle or an entire crate to maximise your return.

Obviously, it helps to have a passion for wine when getting involved in this form of investment. By reading reviews of wine and by looking out for growers that have had a good harvest, you can help pinpoint wines that are likely to be valuable in the future. There are wine experts that may also be able to help you with this form of investment. Having a suitable place to store the wine could also be important – if poorly stored, it could affect the quality of the wine and reduce it’s value. A cellar is a popular place for people to store wine. 

Precious metals

It has long been popular to invest in precious metals such as gold and silver. The value of these metals is always increasing, even if there are small fluctuations now and then. Of course, this depends on the type of precious metal you buy and where you source it from. 

There are many ways to invest in precious metals. You could buy a piece of jewellery or an artefact made of gold or silver. Alternatively, you could invest in bullions. There are many gold and silver dealers out there that you can buy from. It’s worth spending time doing your research in order to find the best pricing as well as making sure that a dealer is reliable. 

**This is not to be considered investment advice.  Prior to making any investment you should consult a qualified financial professional.