Top 4 Alternative Investments to Stocks and Bonds to Invest in 2022.
If you are reading this post, you might already be contributing quarterly or monthly to some private retirement pension or basic state pension scheme. In simple words, you would be most likely looking for new and safe ways to create more wealth by the time you retire. For most individuals, the go-to way for doing this precisely is to invest their extra income into the stock markets, mutual funds, or exchange-traded funds.
Yes, you read it right! While the year 2022 in the UK has geared up at best to attain a strong economic position in the world. Even if we look at the recent numbers across various statistical platforms, investors have tried to invest their money into alternatives, helping them enhance potential returns and reduce risks in the long run.
Alternatives to bonds, cash, or stocks have been there for years. Still, some investors are not familiar with the concept yet. The best part is that alternative investments are more likely to perform better even when the equity market is down or flat. They act as inflation security and may protect investment capital while generating returns throughout all stages of the financial cycle.
Now, let’s take a quick look at the most result-oriented alternative investments other than stocks. Not to worry! They are potentially volatile and relatively safe investments compared to stocks and bonds.
- Real Estate Investments
It is not surprising to know that real estate trusts in terms of investments have been a lucrative option. If you do not prefer to invest in rental properties directly, you can always go with REITs. They allow investors to make passive income by backing in real estate with a low barrier to approach. Typically, there are public non-traded, public traded, and private REITs. Even in the past few years, residential options have been the least correlated with stocks and bonds, letting the sector be a good defensive play in an open-to-question economy.
- Fantasy Sports
With billion dollars of industry and fans worldwide, this alternative is associated with some of the most hyped corporates, big names, sports players, and competitions. Even 2022 has been a tremendous year for visioners planning to be a part of the fantasy sports world. Seeing trusted accomplishments like Betway casino games and Premier League Football, they have successfully been a better stage to entertain people. We have to mention that fantasy sports apps and websites are worth trying in the 21st Century.
- Physical Silver and Gold
These metals have been historically seen as a long term store value, liquid asset, and an alternative to fiat funds in periods of economic turmoil or high inflation. Indeed, Gold always had a meagre correlation with bonds and the stock market, making it a potentially favourable alternative investment. According to a Montreal based retailer for precious metals, KITCO METALS, the price bracket of Gold has nearly increased more than 600% since 2000, shifting from $283 to $1,802 per ounce (last recorded in July 2021).
- Venture Capital and Private Equity
Venture capital is a type of private equity that allows you to invest in early-stage companies, some of which may have the possibility to disrupt existing inherited businesses or immediately expand into a present-day marketplace. According to a research study by CB Insights, some of the most successful bets placed in the venture capital market have been Groupon, Facebook, WhatsApp, Snap, and Current. However, before investing, one must know that returns in this specific market adhere to the Pareto principle – 80% of the profits come from 20% of the deals.
On the other hand, private equity is a popular alternative investment among institutional investors, initiating average annual returns of nearly 11%. As mentioned by Forbes, there are nine potential buyers for every private equity being sold as an investment class. Usually, investors pay off money that is often preoccupied for a maximum of 10 years or until the fund is sold to another buyer or goes general in an IPO.