After years of diminishing returns on the stock market, more and more financially savvy people are looking towards alternative investments. But what are alternative investments?
Strictly speaking, these are any investment assets which fall outside of the scope of “traditional” investments such as stocks and bonds. They benefit from being less restricted, allowing investors to choose what, when, and how they invest.
By 2023, it is estimated that the alternative investments market will hit a whopping $14 trillion in size, as more and more people seek to avoid the restraints and disappointing returns of conventional investments.
If you’re looking to invest outside the box, here is a list of alternative investments that you absolutely need to consider in 2020.
1. Venture Capital
One of the most popular options for alternative investment funds in 2020 is venture capital or VC. This is essentially when you use your money to invest in a growing company that has long-term potential.
By providing venture capital to a company, you stand to profit from the future growth of that company. This is why Silicon Valley is the world’s epicenter for VC funding, owing to the high number of “unicorn” startups that are based there.
2. Real Estate
By some measures, real estate is the most popular asset class in the world. In times of market turmoil, real estate has historically proven to be a sound investment. With the right knowledge of high-growth real estate markets, you could yield considerable returns by investing in real estate.
To do so, you could switch out your traditional IRA with a Self-Directed IRA, which removes the restrictions placed on traditional IRAs to allow you to invest in real estate for your retirement. Alternative real estate investment comes in all shapes and sizes, so do your research before committing.
The commodities market is vast and incredibly diverse. This means that you should always consult commodities experts before you consider dipping your toe into this oftentimes volatile market.
Popular commodities include oil, gold, coffee, and steel, and are usually traded on futures markets. If you play your cards right and open a commodities contract at the right time, you could make a substantial profit.
4. Private Equity
Private equity is a cornerstone of alternative investment management. In a nutshell, this involves investing in companies that are not publicly traded. This is usually about playing the long game, as you will have to wait for the private equity fund you have invested in to sell your holdings, either as part of an IPO or as a merger or takeover. This can easily take several years, but the returns can be substantial.
Self-Directed IRA: A Vehicle for Alternative Investments
No matter what kind of alternative investments appeal to you, it is important to have access to the funding vehicles that actually allow you to make those investments. One effective way to do this is with a self-directed IRA.
Traditional IRAs have strict limitations on how the money in it can be invested. However, a self-directed IRA gives you the power to control how you invest in your future. Do not hesitate to get in touch with one of our IRA specialists today to learn more.