It’s been more than 10 years since the Great Recession, are the good times coming to an end?
We are in the longest bull run in the American economy since WW2. Historically it is only a matter of time before the market recedes. As the unemployment rate bottoms out at 4%, former chairman of the Federal Reserve Ben Bernanke predicts the government’s current fiscal stimulus package will boost the current economy but might send us “off the cliff in 2020”.
Many investors today are unaware of alternative options for investment that are not ties to the stock market. These options should be considered as new additions to portfolios to stem the ebbs and flows of the broader economy.
Here are 5 strategies to consider when looking at putting your money elsewhere other than the stock market:
1) Rental and Seasonal Properties
The high costs of home ownership have led to a boom in people renting properties, so purchasing a second property can be a great way to boost your finances.
Rental investments can be a quick way to generate returns. The downside will be having to be a landlord and handle maintenance and tenants, but there are property managers for that.
It’s also a good way to build equity especially if you’re in a market that has a high demand for rentals and vacation properties. You would also have to set up your own payback model to recoup your investment.
- Set-up: Difficult
- Time commitment: High
- Investment required: Moderate ($20,000 to $100,000)
- How: Self-research
2) Commercial Property
The approach to this is similar to that of rental properties, but in this case, you are buying into properties like a strip mall or a one-two star hotel. The initial investment is steep, and there will be the issue of screening potential partners for reliability and expertise.
But the potential returns mitigate the risks, as you are looking at a 6% to 12% return based off your initial investment of time and capital as compared to the 1% to 4% return on the single family home.
- Set-up: Difficult
- Time commitment: Moderate
- Investment required: High ($250,000+)
- How: Self-research
3) Franchise chain
Consider investing in a single franchise or a few successful chains, like a Subway. The franchise investment could earn you a 15% to 15% return on investment if the growth trends continue the way they have been for the past year.
To get started on this, sign up for a franchising trade show. The potential drawback is that for your investment to be worthwhile, you may have to purchase more than one franchise, which means a larger initial investment and additional time spent finding the right partners.
- Set-up: Difficult
- Time commitment: Moderate to high (if self-run)
- Investment required: High ($50,000 to $1 million)
- How: Self-research
4) Peer-to-peer lending and crowdfunding
These online platforms enable borrowers to connect with a wide range of lenders including yourself instead of having to rely on banks for financing. The borrowers are usually individuals or small businesses. generating a return of 8% to 12% on average.
By industry expert estimates, the industry is rapidly expanding. Most platforms focus on consumer lending, and you have to keep up to date with credit cycles and interest rate fluctuations.
- Set-up: Easy
- Time commitment: Short
- Investment Required: Low ($5000+)
- How: Online platform
5) Alternative Lending
If you’re looking for an easy investment that requires less time and energy spent, look no further than specialty finance products. Examples such as real estate, commercial loans and even certain legal settlements can yield upwards of 8% to 20% returns.
In the past, these investments were reserved for investors with ultra-high net worth and large banks. Nowadays, platforms like YieldStreet offer investment opportunities to retail investors in real estate, litigation financing and consumer lending.
- Set-up: Easy
- Time commitment: Short
- Investment required: Low ($5000+)
- How: Online platform
Start Today
There are many diverse options that exist outside the stock market for the savvy investor to get into. The only obstacle is to learn about them in online marketplaces and then start immediately.
If you would still like to talk to a professional the Financial Helpers are always ready to assist you.
