Are you thinking about getting out of the stock market? Most people have placed their financial trust in stocks, bonds, precious metals, etc. But if you are interested in diversifying your portfolio in some alternative investments in 2021, below are 6 great possibilities.
Real estate is one of the most common alternative investments. Your home is where you reside, but it also gains value over the years.
There are many other ways to make money in real estate:
- Buy and hold rental properties
- Fix and flip houses
- Be a ‘hard money’ lender to flippers (an excellent way to earn a
- reasonable interest rate if you don’t want to hold property)
- Invest in commercial buildings, such as apartments
You can even go unconventional in real estate and buy and sell burial plots. While it sounds morbid, burial plots are just another type of land, albeit small lots.
Cryptocurrencies such as bitcoin and ethereum run hot and cold, but many financial experts think buying popular cryptocurrencies and holding them for the long-term is a wise investment.
Cryptocurrency does not have a central bank to back it, but it is accepted at more retail stores and websites. It seems likely that cryptocurrencies will grow in popularity in the coming years, and people who got in early could earn a nice profit.
Gun ownership carries an intrinsic value of its own. While firearms will not make the top lists of investments in the US, they make sense because they are a wealth store.
Well-maintained firearms will generally at least hold their value as the years go by. Some people refer to their collections of rifles as their ‘other 401k.’ If the world economy goes down the tubes and your Vanguard 401k shrinks to nothing, you can bet your cache of well-maintained firearms will hold their value or even appreciate over time.
Some gun collectors say that if you find a gently used Glock or revolver at a reasonable price, it’s undoubtedly a better place for your extra cash than a savings account earning 1%.
If you own real estate that sits on oil or other valuable natural resources, it is possible to sell the mineral rights to a company that will dig those minerals out of the ground. While the term used is ‘minerals,’ the commodity of value can be oil, gas, coal, diamonds, silver, gold, or other precious resources.
Real estate owners who own mineral rights could convert their income stream into a lump sum cash payout. You could buy their rights, collect the income, and make a significant profit.
An unusual way to invest in real estate without purchasing the property is to invest in private mortgages. You act as the bank and lend money to a home buyer as a mortgage.
Your investment cost is the size of the mortgage itself. You collect payments each month with interest. The property is collateral, so you can take possession of it if the owner defaults.
Make sure you understand the mortgage default process for the area in which you’re offering mortgages. You only want to invest in places where you can foreclose on the property quickly if the owner stops paying.
When a homeowner cannot pay their property taxes, the local government auctions the property to pay the taxes. It essentially is buying debt from the local government, and the property owner owes you back taxes.
As an alternative investor, you can make interest in taking over the tax lien from the homeowner. But like investing in private home loans, you need to be prepared to foreclose if the owner does not pay the mortgage.