The 11 Best Alternative Investments in 2024 (2024)

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Looking to diversify your investment portfolio outside of traditional investments like stocks, bonds, and mutual funds and into new investment opportunities?

The list of alternative investments is eclectic — property, art, precious metals, collectibles, and other alternative investments … But which of these alternative investment options is best for you?

I’m here to help you figure it out. In this article, I’ll introduce you to some of the best alternative investments out there. We’ll start with the basics — What are alternative assets, anyway? Why do institutional investors and hedge funds love them so much? — and continue to the benefits and drawbacks of several types of alternative investments. Then, we’ll deconstruct the alternative investment industry and guide you toward the highest-quality platforms.

The 11 Best Alternative Investments in 2024:

If you’re interested in taking a detour from traditional investments and exploring alternative assets, it’s crucial to educate yourself on the different options. Here, I profile some of the top platforms and alternative assets out there:

1. Real Estate

Did you know that 40% of an average millionaire’s assets consist of real estate?

Here’s one of the most traditional investments out there — that also happens to be an alternative asset.

But these high-yield alternative investments aren’t just for millionaires. Investing in rental properties is one of the best alternative investment ideas for investors of all types.

Real estate is one of the best alternative investments because it tends to appreciate in value over time:

• Since 1991, the average annual home price increase has been 4.3% (according to the FHFA).
• Since 2000, the average rate has been 4.7%

Unfortunately, property values have appreciated so much that many investors today find it difficult to buy property outright. However, there is an alternative to buying traditional real estate investment trusts.

That’s where Fundrisecomes in. On this real estate investing platform, investors can invest in real estate without the hassle of buying and managing properties or dropping a huge down payment.

With their simple and user-friendly online platform, you can easily invest in a portfolio of high-quality real estate assets — as well as gain access to markets that are often considered the territory of private equity firms and hedge funds, such as private debt and pre-IPO companies.

More selling points: 1) It’s available to retail investors — no accreditation required. Plus, they’re transparent about client returns. If you go to their website and click on “Client Returns,” you can see client returns updated in real-time.

Required Reading: Fundrise Review: Can You Really Make Money?

But Fundrise is not the only option for investing in real estate. Yieldstreetis another option for alternative opportunities in real estate and beyond.

With Yieldstreet, accredited investors can invest in art, commercial loans, and other products that were previously only available to institutional investors.

Yieldstreet is a great choice for investors looking to diversify their portfolios and potentially earn higher returns.

2. Art

It’s not one of the most traditional investments out there … But art is another must-have on any list of alternative investments. That’s because art is a tangible asset with intrinsic value that can appreciateover time.

Investing in art allows investors to tap into the emotional and cultural value associated with artwork, which can often hold up well over time.

In the last two decades, you can see that all art tends to keep pace with the S&P 500 while contemporary art has outperformed both:

Of course, investing in art also comes with risks, like art market fluctuations and the costs associated with purchasing and storing artwork. Plus, you need to know a thing or two about art.

If you’re interested in using art as one of your alternative investment options, don’t immediately run out and buy a Bansky. Instead, investors can check out Masterworks, a platform that lets you buy fractional ownership in famous art pieces.

This way, you get access to some of the world’s most valuable and coveted artworks without having to drop a huge sum of money or worry about shipping and storage.

Masterworks also has a proven track record. It has already sold +$45mm in art, distributing the net proceeds to everyday investors.

While Masterworks is available to non-accredited investors, there is a waitlist. But as a WSZ reader, you can skip the waitlist here.

3. Collectibles

“Collectibles” is an umbrella term that includes several types of alternative investments, such as:

• Cars
• Watches and jewelry
• Coins
• Wine and whiskey
• And more…

Those are just a few of the “collectibles” alternative investment examples out there. But it leads to the question: Why are collectibles one of the best alternative investment options? Here are two reasons:

• Collectibles have a low correlation with the stock market, so they can be a great way to diversify your portfolio and reduce overall risk.
• In contrast to more traditional assets,according to the Knight Frank Luxury Investment Index, collectibles beat inflation in 2022 and outperformed the majority of mainstream investment classes, including equities and even gold:

If you’re looking to add collectibles to your list of alternative investments, one platform that stands out in the space is Public.

Public is open to both accredited and non-accredited investors. It’s an alternative investment marketplace that offers a range of investment opportunities in various collectibles such as luxury handbags, comics, and even sports memorabilia.

By providing access to a diversified portfolio of collectibles, Public allows investors to spread their risk and potentially reap the rewards of a successful investment.

4. Private Companies

Investing in private companies is one of the most exciting alternative investment options out there. These companies are often at the forefront of innovation, with the potential for huge growth and returns.

However, it’s important to remember that investing in private companies comes with inherent risks, including the possibility of losing your entire investment. That’s why it’s crucial to do your due diligence and only invest what you can afford to lose.

But for those who are willing to take the risk, investing in private companies through platforms like Hiive can offer exciting potential rewards.

Hiive connects accredited investors interested in a stake in private and/or pre-IPO companies with employees, venture capital firms, or angel investors who want to sell shares.

Hiive is brimming with neat features — for instance, there’s a live pricing chart for each company which includes prevailing bids and asks, and you can create watchlists and get notified about price changes or new listings offered.

Additionally, you have flexibility. Buyers can either accept the asking price as listed, place a bid, or negotiate directly with the sellers. As an added perk for investors, for standard transactions, the sellers are the only ones who pay fees.

5. Venture Capital

Venture capital investing involves putting money into early-stage companies that have high potential for growth, but also a high risk of failure. But if the investment is successful, the returns can be astronomical.

Yieldstreetoffers opportunities to invest in venture capital projects through its platform, providing investors with access to a diversified portfolio of early-stage companies that have gone through a rigorous vetting process.

However, it’s important to keep in mind that these potentially high-yield alternative investments can be highly illiquid and should only be considered by those with a high risk tolerance.

6. Private Credit Blended Notes

Another one of the many alternative investments currently growing in popularity? Private credit blended notes, also known as direct lending funds.

These are private credit loans made to companies or individuals that aren’t publicly traded, and they’re often used to finance real estate development, buyouts, private debt, or other business activities .

With Percent, accredited investors can get exposure to multiple notes across different asset classes and geographies, all in a single investment.

So blended notes can be attractive investment products for fixed-income investors looking to instantly diversify beyond bonds.

However, it’s worth noting that investing in private credit blended notes does come with some risks, such as credit and liquidity risks. So investors need to carefully evaluate the underlying borrowers and the terms of the notes before investing.

7. Farmland

Billionaire investors like Bill Gates and Bill Malone invest in farmland for a reason: it’s a relatively untapped investment opportunity that can provide a unique diversification to your portfolio.

Plus, investing in farmland can have a positive impact on society by supporting sustainable agriculture and contributing to the production of essential crops.

But how do you invest in farmland without dropping major money on pristine acreage? Luckily, platforms like AcreTraderlet accredited investors easily invest in farmland properties across the United States.

By investing in farmland through AcreTrader, investors can access a variety of farm types and locations, with the added benefit of professional management and expertise.

8. Cryptocurrency

Cryptocurrency has been a hot topic in the investment world in recent years.

Investors considering crypto among their alternative investment options should know that it’s a highly volatile investment, and the market can be unpredictable. Just look at Bitcoin, which once soared over $60K but trades closer to $28,000 today.

Despite the risks, many investors are still drawn to the potential for high returns in the cryptocurrency market. One option for investing in cryptocurrency?

Bitcoin IRA, which allows you to buy and hold Bitcoin and other cryptocurrencies in a tax-advantaged retirement account.

But as with all alternative investment products, make sure to do your due diligence before investing in this asset class.

If you don’t care about holding your crypto in an IRA, another solid choice is eToro, a social trading platform that allows investors to buy, sell, and trade cryptocurrencies.

9. P2P Lending

The idea behind peer-to-peer (P2P) lending is simple. Instead of going through traditional financial institutions, borrowers can get loans directly from investors through P2P lending platforms.

As an investor, you earn interest in return for borrowers getting access to loans at lower interest rates than they would through traditional channels.

It may sound risky, but typically investors can choose which loans they want to invest in, based on the borrower’s credit score, the loan amount, and the purpose of the loan.

LendingClubis a well-known P2P lending platform that connects borrowers with investors.

• Since its inception in 2007, LendingClub has facilitated over $68 billion in loans and has over 3 million customers.
• According to LendingClub, their investors have historically earned returns of between 3% and 8% per year.

With yields like that, P2P Lending is one of the best high-yield alternative investments.

Of course, there’s still some risk of default, so do your research and carefully consider your investment options before doing any P2P lending.

10. Precious Metals

Precious metals are considered a safe haven for investors during times of economic uncertainty. The metals tend to hold their value well during inflationary periods and can also act as a hedge against geopolitical risks, making them a popular alternative investment option.

The chart below shows the long-term return of gold vs. S&P 500:

You’ll see that bear markets in equities were often bull markets for the price of gold. This is another advantage to precious metals: they can be uncorrelated with the broader stock market.

Investors can gain exposure to these alternative investment products through exchange-traded funds (ETFs) such as the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV), as well as through physical holdings of bullion or coins.

You can even hold precious metals in an IRA for extra tax savings.

Check out our top gold IRAs:

11. Commodities

Commodities is an umbrella term that includes materials like:

• Lumber
• Coal and uranium
• Wheat and oats
• Copper and aluminum
• Oil and gas
• And much more

The basic value proposition for commodities is that while they’ve been on the rise lately, they’re still very cheap historically when compared to stocks:

Plus, with oil giants like Shell (NYSE: SHEL) yielding 4+% or copper kings like Southern Copper (NYSE: SCCO) yielding 5+%, commodities are also one of the best high-yield alternative investments.

Investors can choose from individual companies like the above, commodity-specific ETFs, or keep it simple with a broad natural resources ETF like GNR, the S&P Global Natural Resources ETF:

Bottom Line: Alternative Investments

When it comes to investing, diversification is key to minimizing risk and maximizing returns in your investment portfolio, so it’s worth considering alternative investments in addition to a mix of traditional investments such as stocks, bonds, and mutual funds.You may not have direct access to, say, private equity investments, but alternative investments provide unique opportunities to diversify your portfolios and potentially earn high returns. (More on this in the benefits of alternative investments.)

Real estate, art, collectibles, private companies, venture capital, and private credit blended notes are some of the best alternative investments to consider. Just remember these “non traditional investments” / alternative assets also come with inherent risks, such as illiquidity and fluctuations in value that may differ from traditional investments.

Before investing, it’s crucial to do your due diligence, understand the risks involved, and only invest what you can afford to lose.

To minimize risk, stick to trusted platforms like:

• Fundrise(real estate)
• Masterworks(art)
• Public (collectibles)

These platforms make it easier for investors to access the best alternative investments without requiring a ton of money to get started.

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