Investing

Avoiding the Next Crash: 10 Alternative Investments Outside of Stocks, Bonds, ETFs and Mutual Funds

5. Royalty Income Streams

Most investors do not know that individuals, just like sophisticated institutional investors, can own streams of royalty income. In modern days people might immediately think of royalty payments tied to oil and gas. The reality is that there are many royalties that can be invested in. It is possible to invest in royalty payments tied to gold mining, music, patents or copyrights, or even in films and TV. And some investors have even bought royalties tied to clothing lines. Another new royalty stream investment that is available is investing in the rights to future income of athletes. There are even exchanges and venues for people to buy and sell royalties.

Perhaps it sounds fun just owning streams of royalty income. These can be very lucrative, but they can also be duds. Many athletes, musicians, brands, oil wells and the like simply fizzle out or die. Some royalties on the future sales do not live up to expectations. Another risk is that there can be legal disputes over what real sales were to base royalties on or what the real income levels were.

6. Gold and Silver … or Even Cryptocurrencies

The price of gold and silver has gone sky-high and come back down to earth over time. Gold has a history that goes back centuries and even for thousands of years. The shiny yellow metal has been sought after since the dawn of time. It is also a key holding of central banks, and probably every wealthy person in the world has been told over and over that they have to own some gold. Gold or silver can easily be bought and sold now in the financial markets, online or at gold exchange stores. The same issues exist for people investing in silver.

Gold and silver can come with risks that might not normally be thought of. Industry and technology keep finding new replacements that are far cheaper to use. When gold gets too expensive, they use less gold in making jewelry. Neither will ever pay a dividend, and they cannot be consumed if you get hungry or thirsty. Gold and silver also get taxed at the same rate as collectibles, so you generally have to pay 28% on your profits. And there is the risk of theft or loss.

A new form of gold or silver may be cryptocurrencies. The world has been enthralled with the likes of bitcoin. Dozens of wannabe cryptocurrencies have been issued, and there have been reports of many cryptocurrency millionaires. That said, there are also huge risks for cryptocurrencies. Some people have lost their computers or phones in which the cryptocurrencies have been held in a digital wallet. Some computers have crashed. And some get hacked. And there is no hard asset behind a cryptocurrency at all, and good luck getting help from law enforcement if it is stolen from you. There also have been some tax nightmare stories that might keep cryptocurrency buyers away.

7. Buying at Garage Sales and Estate Sales

Being a person who goes to estate sales or garage sales may sound more like a part-time (or full-time) job rather than an investment. Still, many people in America go to such sales looking for items that are at rock-bottom prices or where the sellers have no clue of the value of the items being sold. Many sellers want to get rid of family items such as furniture, collectibles, clothes, art and just about anything else at prices that might be pennies on the dollar. Many antique store owners find their pieces at estate sales. Individuals can do this as well, and these items can then be sold from your home via eBay, Amazon or Craigslist. And sometimes, those items can often be sold to stores or dealers.

There are also risks in buying from estate sales or garage sales. As with other alternative items, someone can show up down the road and claim that the item was stolen. If you are not paying close attention to what you are buying or selling, it might be something rather different from what you thought it was. And there is the risk of fakes and replicas, where sometimes not even the seller or buyer ever knows it’s a fake. And back to beauty being in the eye of the beholder, you might think something is worth $10,000 that is worth a few dollars. There is also a risk that an online buyer tries to back out, or return the item or dispute the transaction, or even claim they never received it. There is no free lunch here.