After the market crash of 2008, many are loath to invest in the traditional markets. And who came blame them? Even though the economy is rebounding it can still be difficult to put your money and faith in a financial advisor or fund that you have little to no control over.
For those who prefer a less-traditional approach, there are several ?alternative? investment options that offer lower risk than investing in the markets:
1. Art. Perhaps this one isn?t so unusual, but compared to traditional investments like stocks, bonds and funds, art doesn?t fall into the mix. Making a good investment in art isn?t much different than the actual stock market; you have to buy low and sell high to make a profit. You also have to do a good bit of research to try and find an undervalued artist, someone whose work is both timeless and on-the-rise. In order to get the most ?bang for your buck? you will need to be comfortable holding onto the art for a long time. It should also be noted that in order to retain its value the art has to be meticulously preserved and cared for over the time you own it. Add to the additional costs of this investment: framing, glass, and preservation.
Still, art is less volatile than the market.
2. Cars. And no, we?re not talking about the minivan you use on a day-to-day basis. Those depreciate in value the minute you drive them off the lot. We are talking about sexy, collectible or ?classic? cars. Unfortunately, most collectible cars are already expensive when they come on the market, meaning you have to be prepared to make a hefty payment up front, but over time collectible cars have been proven to increase in value even better than the S&P 500. The best cars to purchase are ones that were scarce when they were manufactured, making them almost a rarity today.
We don?t recommend investing in cars to novices or those who only have a passing knowledge of collectible cars, but for someone who works in the industry or reads car magazines for fun, this kind of due diligence could be very easy for them to complete and understand.
3. Collectibles & comic books. Haven?t you heard? Nerds are all the rage these days. Jokes aside, it has never been a better time to cash in on your baseball cards or comic books.
Remember this guy who found a rare Superman comic in an old movie magazine and sold it for $1.5 million?
Go to yard sales or antique stores. Often times sellers of these items have no idea what they have. There are many comics, some are worth more than others, but ones with important characters or storylines will always be worth a pretty penny to savvy collectors. Unfortunately, comics are usually only worth a good bit of money when they are in near-perfect condition. But you could still probably sell a battered copy on ebay for more than what you found it for, which is probably for free in grandpa?s attic.
4. Wine. Sigh. Sadly we won?t get rich off of buying a bottle from the local grocery store and squirreling it away for 30+ years. Noticing a pattern here? In order to invest in anything it takes time, both in years you hold the investment, and also time on the front end to make sure you do your research on wines.
“Blue Chip” wines have held their value better than the S&P, but the list of ?blue chip? wines is small and selective. Not to mention the steeps costs of properly storing wine over a period of years. We are talking about temperature controlled wine cellars, which can run you upwards of $20k to build.
Maybe you and a friend can go in on a shared cellar together?
5. Animals. I mean specifically thoroughbred horses. Like other unusual investment options on our list, horses cost a lot to initially purchase and maintain over time (consider the food, stabling, and healthcare costs.) Still, if you plan appropriately, you can breed a horses and earn significant returns on your income on the offspring of the horse you buy. With horses going for anywhere between $5-500k, it?s not a cheap investment, but the payoff is large.
Investing in animal based stock is also not a bad idea if you prefer to put your money in the markets. Stocks for pet companies like Petco grew in spite of the recession. You can?t put a price on how much people love their pets!
I could continue on with the myriad of unusual investments you can make: investing in a friend?s business or restaurant, gold, peer-to-peer lending or a sports franchise. The message is still the same: in order to maximize returns on your money faster than simply stashing it in a savings account you have to be open to investing in the first place. After all, you never know when someone?s next great idea could be your retirement nest egg.