10 Alternative Investments Outside of Stocks and Bonds

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Investors in 2016 have to be scratching their heads when it comes to where to invest. The trend has been set for years now that investing in Treasury notes and bonds has generated too little yield to live off of, and forget about certificates of deposit (CDs), as quantitative easing and easy money have kept interest rates extremely low. All those worries over high market valuations, Brexit, political uncertainty, terrorism, weak economy, strong dollar and on and on. And somehow U.S. stocks are at all-time highs. This begs the question: How is anyone supposed to invest their money to make any money now?

Maybe it’s time for investors and savers to consider alternatives outside of the traditional assets like stocks and bonds. Some alternatives to traditional investing can be quite safe. Others can be quite risky, or they can bring many complications.

Here 24/7 Wall St. outlines 10 alternative investing strategies in which the public can invest in most economic conditions. Some of these, but not all, may even be able to be used in 401(k) and IRA retirement accounts. Others may seem more like jobs than investments. What should be considered here is that not all alternative investing strategies are appropriate for every investor.

Let’s just assume that you need an extra $40,000 income per year on top of your retirement or social security income. Or let’s just say you are a tinkerer more than a career person. That would make cash flow and/or income extremely important. If you already have millions of dollars, then longer-term growth and value may matter more than needing income today. Every form of alternative investing comes with risks. Whether it is Wall Street or Main Street, the reality about money and investing is that there is just no such thing as a free lunch.

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While Treasuries and CDs were named, we are also not including bonds from corporations, federal agencies, states and municipalities as alternatives. Those are of course alternatives, but they are quite common ones and they will be featured another time.

Also included here are at least some of the pitfalls and risks that must be considered in each individual asset class. One theme that will be evident here is the timing and liquidity of an asset. You can buy or sell stocks or most bonds in a few seconds with limited effort, but you can spend years or have to pay penalties or fees to exit many alternative investments.

Here are 10 alternative investment strategies for the public.

1. Property and Real Estate

Have you ever heard of the notion that they are not making any more land? More or less, that is true. Investing in all forms of land or real estate has helped make many millionaires and billionaires. Some land investors also would never dream of buying stocks or bonds because they have done so well. Whether you are a landlord for a house, apartment or business, the goals are generally to get ongoing income and having your tenants pay off the mortgage or note through time. Outside of traditional land, there is also timberland, farming, hunting leases and many other uses.

Cons on land and real estate need to weighed. First and foremost, you generally have to already have a lot of money to buy most land and real estate. Land and real estate can be rather illiquid and can take years to sell. They can also sit vacant or unimproved for many years. Land owners also have to pay property taxes and often have to pay for improvements or maintenance, or they need to keep insurance, all of which can add up quickly and over time.

2. Annuities

If you want to get as wide of a range of reactions as you can imagine, go ask people who invest money or who have assets what they think about annuities. Generally speaking, annuities are supposed to be relatively safe cash flow payments made annually. They also may be used for asset protection strategies, and that may fall way outside of just looking for gains or income. Annuities come in many styles, ranging from immediate to deferred, and they can be fixed annuities or variable annuities — with many variations in each. Investors often use annuities to help with cash flow needs, and they are often more than willing to sacrifice upside for the assurances and safety of principal.