When it comes to investing your money there are many factors to consider that will determine what investment type is right for you. Traditional investments like the stock market and bonds are generally the first type that people think about. However, there are lots of opportunities in alternative investments like real estate and commodities as well. Everybody’s situation is different so deciding which one to invest in will require some studying.
Traditional investments include the stock market, bonds, and cash. Anything other than these, are considered an alternative investment. Many people believe that the stock market and bonds are great because there is no time commitment that goes along with it. You can simply buy a broad market index fund along with a bond fund and not have to worry about it given you have a long enough holding period. There is also the benefit of the small barrier to entry when it comes to the amount of capital you have. Features like fractional shares can allow anybody to invest even with as little as a couple of dollars. Anybody can easily buy and sell stock from their phones at any time with just about any amount of money which is so much more liquid than some alternative investments.
Alternative investments include things like real estate, commodities, venture capital, and even Merchant Cash Advances. The next big investment people love next to the stock market is real estate. Many people argue that it is one of the best ways to use leverage to increase your net worth and cash flow. To get into real estate investing you will need a lot more initial capital than you would in other investments opportunities like the stock market depending on the location.
Investing in Merchant Cash Advances is another way you can gain exposure to alternative assets. This is when you essentially purchase future receivables from a company and get paid cash each week a pre-set amount. Not only are these alternative investments great on their own, but they also provide some diversity in your investment portfolio.
Advantages and Disadvantages of Investment Types
Alternative investments and traditional investments can both have their upsides and downsides, so it is important to study them to determine which is better for you. An advantage to alternative investments is that they can be uncorrelated with the U.S. economy. For example, you can invest in Merchant Cash Advances and receive weekly payouts regardless of how the overall economy is doing. A downside of alternative investments that counters this is simply that you are not correlated with one of the greatest economy in the world. Traditional investments on the other hand are essentially at the mercy of the U.S. government and economy. Of course, they have done well over the long run, but you never know what can change in the blink of an eye. Remember, it is always a good idea to consider diversifying your portfolio and alternative investments are one of the best ways to do so.