Alternative Investments for Millennials

Are you sick and tired of all those stocks and bonds that folks will traditionally recommend you to invest in? I cannot say that I blame you with the recent turmoil in the stock market! Well, you don’t have to be tied down to stocks and bonds forever. This is especially true for millennials – they like to do just about everything differently than generations before them. Why not apply the same thinking to investments?!?

There is a whole world of non-traditional investment out there for millennials (and everyone else too) to choose from if you are willing to do a bit of work to uncover it. You could either devote you entire investment portfolio to these alternative investments, or you could allocate just a portion to them in your investment portfolio.

What Are Alternative Investments?

Investing in items and assets outside the realm of traditional investments is normally referred to as alternative investments. These can be much more interesting and complicated than typical stocks and bonds. They can also be quite a bit riskier, but the payouts can be huge if you select the proper alternative investment! According to many experts, these classes of investment could give you a competitive edge in the game of investing. When planning on investing money today for future gains, there is a wide range of options to select from in this alternative investment field. Let’s learn a bit more about alternative investments below…

Alternative Investments Run the Gamut

Your options when looking at alternative investments range from racehorses, to cars, to land. That’s right: even real estate is classified as an alternative investment class. There are a number of ways in which you can invest money in these alternative investment examples, and it is imperative that you do it in the right way to see a good return. We don’t want you investing in a lame horse or a lemon of an old car now do we?

While there are a lot of crazy alternative investments that you can make ( Pokemon cards anyone?), you shouldn’t jump into bed with any investment choice too soon. Before dropping a large sum of money as an investment, it would be wise to “test” the investment to make sure you know what you are doing. For example, just because you buy a classic car that looks like it could bring a huge return in some markets doesn’t mean you will see that return in your current market. I always find it is best to work your way up with these sorts of things. I am sure nothing feels worse than losing your entire nest egg on a risky alternative investment.

Now, let’s look at a couple specific alternative investment ideas to get your brain juices flowing :-).

Peer-to-Peer Lending

This is an investment for people who are always chosen as the banker in money-based games because of your knack for numbers and interest. If you want to be paid with regular monthly interest payments , a peer-to-peer loan system investment may be perfect for you. This type of alternative investment will not have the disadvantage of rising and falling with the economy.

When a person engages in a peer-to-peer loan system with a company that facilitates this, they will fill out an online application. After this is approved, they are entered into the online system for selection. When browsing for a peer-to-peer loan to fund, you are show their credit score along with a rate of interest for the loan if you choose to fund it. In this way, lenders (you) are connected with buyers over the peer-to-peer lending platform.

For peer-to-peer lending, the returns are actually not that bad. You can expect a return of up to 12%, although the average is more in the 6-7% range. Of course, as with all types of loans, sometimes borrowers fail to pay. This can cause a fair amount of risk in this type of investment and is why interest rates are above the risk-free rate of return. You didn’t think it would be too easy now did you? Of course, you need to ensure you consider the risk before embarking on this alternative investment.

Art and Collectibles

If you are relatively wealthy, you can splurge on fine art, wine, and historical pieces as an investment. Many assume that these are bound to increase in value over time. This can generally be the case, and certain investments in this area can grant massive returns. As a completely insane example, image if you were to invest in one of Pablo Picaso’s paintings when he was a no-name for a couple hundred dollars. One of Pablo’s paintings just recently sold for more than $106 million dollars! How’s that for a massive return? Investing in art can also be incredibly risky. The risk of theft, damage and wear are all likely things that one would need to take into consideration.