Updated: March 4, 2020
When it comes to investments, the stock market, mutual funds, bonds, and cash deposits are what most people first think about. However, if you’re looking for investment alternatives, what options do you have?
If we’re in the U.S. or in a country with a mature financial market, then the list of alternative investments would be led by hedge funds, managed futures, commodities, derivatives contracts, and many other paper assets.
But since these don’t exist yet or are not as easily accessible if you’re in the Philippines, then you can just instead consider the following products and assets to invest on.
1. Exchange Traded Funds
Imagine a mutual fund that’s being sold in the stock market — that’s the closest analogy to describe what an ETF or Exchange traded fund is.
ETF’s are a good alternative to Index Funds because they carry the same risk and long-term growth potential. If you want to learn more how ETF’s work, then you can read this simple explanation that I wrote before.
2. Paintings, sculptures, and other works of art
This type of investment is only recommended to those who are into art in the first place. Because you need to know which pieces are good to buy, and also how and where to sell them later for profits.
A friend who invests in paintings say that it could take years before an artwork appreciates in value. He suggests that you’ll earn faster by going to exhibitions and auctions, and buying undervalued pieces that you can easily sell.
3. Collectibles and other rare items
Similar to works of art, collectibles such as antiques, toys, coins, comic books, and stamps can fetch thousands and even millions of cash if you stumble upon a rare find in good condition.
Just like art, you need to know a bit of history to make money. Knowledge on specific collectibles will make it easy for you to find rare and expensive items in bazaars, garage sales, auctions, and antique shops.
Are you into toys? Then read this: How to Make Money From Toy Collectibles
4. Intellectual property
Royalty income is passive income. So if you have talent in music or writing, then you can invest your time on writing songs or publishing books.
On the other hand, if you’re a scientist, engineer, or just someone who likes tinkering with stuff, then maybe you can come up with an invention that you can patent and sell. And sometimes, those ridiculous ideas you have could actually be worth millions — just Google “Pet Rock” and you’ll know what I mean.
Lastly, in today’s proliferation of mobile technology, you can also invest your time and resources in creating apps and developing mobile tools that you can sell. Maybe, you’ll come up with the next “Flappy Bird”.
5. Office space rentals
When it comes to real estate, many go for house and lots, condominiums, and apartments. However, there’s an underserved market for affordable office space rentals that micro and small businesses need.
Most people start with home-based businesses, but as these ventures start to grow and hire their first few employees, they will need an office space. And this is where you come in.
Virtual offices have grown significantly in the country over the past few years. But there’s still a big opportunity out there, especially in provincial urban cities.
6. Company cooperatives
If your company has a savings and loans cooperative, then it’s a good idea to consider becoming a member and investing a portion of salary there.
You’ll enjoy benefits, such as low-interest loans and discounts on partner establishments, but you can also receive dividends that are at par with the income of most investment funds.
7. Crowdfunding investment opportunities
There are now crowdfunding cooperative enterprises in the country, which allows you to invest a small amount of money to become part-owner of a business franchise, a farm business, and many others.
However, always be careful. Make sure they’re licensed to accept investments. An SEC registration only proves they are a legal entity, but it doesn’t automatically mean they can solicit investments. There’s another license for that, which they must have.
Moreover, do due diligence on the businesses or farms that they’re investing on. Make sure that they’re actually profitable and they will be managed by a competent organization.
8. Private equity and debt placements
My cousin’s company wanted to expand its operations several years ago. At that time, instead of getting a business loan that will incur debt interest, they just offered stock options to family and friends.
I was one of those who invested and have been enjoying passive income as dividends ever since. There could be similar opportunities that’s available for you.
Startups are growing in the country. While you may not have the time and skills to build one, you can still participate by becoming a venture capitalist or seed investor.
9. Hospital stocks
Speaking of private equity, one alternative investment opportunity that you can seek are hospital stocks. These are usually offered to doctors, but a few are open for the public.
You actually just need to buy one hospital stock, and you’ll immediately enjoy benefits and significant discounts on medical services from the specific hospital. And of course, you’ll receive regular dividends too.
10. Long-term healthcare
Because most financial emergencies are medical emergencies, then it makes sense to invest on long-term healthcare products to provide financial support for your health as you grow old.
These are not the same as your short-term healthcare from your company HMOs. It is a complementary product that combines health insurance, life insurance, savings fund, and investments in one product.
One of the top providers of long-term healthcare in the country is IMG or the International Marketing Group, which I am a member of. If you want to learn more about this, you can send me an email and I’ll tell you more about it.
The forex or foreign exchange market offers a lot of opportunities to make money for short-term traders. However, there are also ways to make money in currencies if you can afford to be in it for the long-term.
Among those strategies are position trading, which is best described as a long-term trade that lasts for several months. Other buy and hold strategies include carry trading, mirror trading, and opening a managed account.
This is a high-risk venture and I don’t recommend that you go into it without acquiring the proper knowledge first. If you’re interested to try investing in the forex market, then you can sign up for eToro.
And lastly, one of the best investments you’ll ever make is increasing your financial quotient. Take courses, attend paid seminars, buy books, etc. — these are not simple expenses, but investments that will help you make more money in the future.
When you invest in knowledge, you acquire information and skills that will make it easier for you to spot opportunities, understand how investments work, and optimize your strategies.
This list of alternative investments are meant to show you how you can diversify your portfolio beyond the more popular types of investments. This means, I’d still recommend having stocks, bonds, pooled funds, and cash deposits.
And as always, there’s no such thing as the best investment. Because the best investment will always depend on your goals. So define your financial objectives first before investing.