If you invest, you almost certainly own stocks or some kind of fund that owns stocks on behalf of their investors. Stocks are growth-oriented assets that can multiply your savings much faster than you could set aside the cash on your own. They appreciate the growth of the economy, and more established companies offer dividend payments, directing profits directly to their shareholders.
However, stocks can also be risky investments. Although the markets are known for their long-term historical growth, they can experience rapid downturns, causing investors to lose billions overnight.
Market volatility is a normal part of investing. An effective investment plan recognizes that stock downturns are part of the economy and manages the effects of volatility by diversifying with alternative assets.
These alternative assets help you expand your portfolio and hedge against stock market cycles. Downturns are inevitable. A smart portfolio strategy anticipates the crash by including assets that won’t be impacted by market crashes.
#1 Bullion
Gold and silver have been stores of wealth for thousands of years. These metals are known for their resistance to corrosion. Gold and silver don’t rust or break down, which made them extremely valuable materials.
Bullion has been part of the monetary system for most of human history, and the shift to fiat currency only happened in the latter part of the 20th century. Bullion remains a popular alternative asset among institutional and retail investors. Even central banks habitually buy gold as a hedge against their own currencies.
One of the easiest ways to invest in gold and silver is buying it from bullion dealers like Global Bullion Suppliers. Bullion dealers buy and sell a variety of gold and silver products, including coins and bars made around the world.
#2 Bonds
After stocks, bonds are among the most popular financial instruments for investors. They provide a more stable and secure way to invest.
A bond is effectively a loan to a company or government, and the returns you earn from a bond are the interest payments that the organization pays on their debt.
Adding bonds to a portfolio can reduce the volatility of your savings. A fairly popular strategy is to convert more of your savings to bonds as you approach retirement age.
#3 REITs and Real Estate
Real estate can be an extremely valuable asset, and its appreciation is not necessarily tied to the stock market or other elements of the economy. When you invest in your home, you’re relying on the appreciation of your asset, but you have to move to realize those gains. Investing in real estate more practically looks like owning a rental property.
Renting out property can be a lot of work, and it takes a massive upfront investment. That’s why some investors choose to invest with a REIT (Real estate investment trust). REITs let you invest in a share of real estate. The property is professionally managed, and you don’t need to purchase the property on your own.
#4 Peer-to-Peer Lending
Peer-to-peer lending is an innovative new way to invest directly in startup companies. P2P lending platforms have removed the middleman when it comes to investing in new companies. Individual investors can directly lend money and collect interest payments as revenue
. It’s an exciting way to tap into the new economy and generate higher interest rates than you can usually get from bonds.
#5 Cryptocurrency
Cryptocurrency is not an easy game to get into. This is one asset that has demonstrated even greater volatility than stocks, and getting the timing wrong can be devastating. That said, Bitcoin has quietly climbed back up to record-breaking prices in the last few years, and it appears to have a lot more staying power than skeptics initially gave it credit for.
Alternative assets are an important part of any investment strategy. Putting all of your money into stocks can expose you to market crashes. Diversify with assets like bullion, REITs, bonds, peer-to-peer lending, and other financial instruments.
