When considering investments, many people immediately turn their attention to the stock market. However, there are numerous alternative ways to grow your savings besides just stocks, mutual funds, or ETFs. In fact, incorporating assets into your portfolio that aren’t closely linked to stock market movements — or even those that might counteract market volatility — often proves to be a prudent strategy.
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Whether you’re hesitant about Wall Street or simply wish to diversify, continue reading to explore various alternatives to traditional stock purchases that can effectively reflect your values and financial goals. Remember that such options have varying levels of risk, so conduct thorough research prior to any investments.
For those wishing to invest in real estate without the requisite capital or time needed for thorough market research, a real estate investment trust, or REIT, may be a suitable option.
REITs focus on different types of properties, which can range from residential housing and office buildings to hotels and industrial warehouses. They then distribute rental income to shareholders, allowing you to partake in real estate investments without needing large sums of money or the time it takes to manage properties yourself.
You might also explore peer-to-peer lending platforms like Prosper and Lending Club, where you can begin investing with minimal amounts, sometimes just $25, to assist in funding loans requested by individuals and receive interest payments as the loans are repaid.
The potential downside here is the risk involved if a borrower defaults. However, by spreading your investment across multiple loans, you can mitigate the danger posed by a single borrower’s failure to repay. Holding one loan means your entire investment could be at risk, while investing in a broad array of smaller loans helps buffer against individual defaults.
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Lastly, consider investing in savings bonds if you prefer stable interest-generating options. Savings bonds are an option provided by the federal government that yield interest over time.
They are considered low-risk investments as they are backed by the government, with the only risk of loss arising if the government were to default on its debt obligations. You have the option of choosing Series EE bonds which offer a fixed interest rate or Series I bonds that have a portion of their interest rates tied to inflation rates.
