“I’ve been investing money into the stock market for ten years and earned nil—zilch—nothing. What’s the point? I’m ready to just pull it all out. It’s not doing anything anyway!”
That was the not-so-subtle frustration of my brother at the tail end of the “lost decade for stocks”—a period from 12/31/99 through 12/31/2009 where the S&P 500 netted (get this) a total return of -0.9%.
For a stretch of ten years, people invested their money into the stock market…and not only did it not go up, it actually went down!
I hate to say it, but it feels like we’re on the forefront of yet another lost decade.
The stock market goes up, then backtracks, goes up, then steps back again. There’s obvious economic and political uncertainty.
It seems the stock market is destined to go nowhere for years to come.
But if you’re not investing in the stock market, what else is there to invest in?
I’ve been asking myself the same thing.
After researching all the options over the past couple years, I’ve uncovered dozens of other investment opportunities. See below for a list of 25+ ways to invest outside of the stock market.
Top Ways to Invest Outside of the Stock Market
Here’s the quick list of investments other than stocks. Pick and choose which of them interest you or read the entire article if you want to learn about them all.
- Pay off debt
- Real estate investment trusts
- Crowdfunded real estate
- Farmland and agriculture
- Residential rental properties
- Commercial real estate
- House flipping
- Buy into a franchise
- Fine Art
- Peer-to-peer lending
- High-Yield savings account
- Certificates of Deposit
- Savings bonds
- Corporate bonds
- Municipal bonds
- Hedge fund investing
- Private credit investments
- Private equity funds
- Venture capital/Equity crowdfunding
- Invest in websites
- Owning your own business
- Invest in yourself
Top Investment Alternative
1. Pay off debt
When people think about investing, they don’t think about paying off debt. But they should!
Think about it.
In the stock market you could earn 8% a year, but there’s no guarantee. (I mean c’mon, we just talked about not earning a single penny for an entire decade!)
When you pay off debt, you’re saving money on the interest payments you’ll never have to make.
Imagine you have a credit card with a $10,000 balance, a 22% APR, and a minimum payment of $200 a month.
According to this free debt snowball template, if you never pay extra on this debt, it will last for 10 years and you’ll end up paying an extra $14,000 in interest payments.
What if you put an additional $1,000 a month toward your credit card payment instead of investing? You’d be debt free in just nine months and save yourself $13,000 in interest payments!
It’s definitely an “investment” worth considering.
Top Real Estate Investments
Interested in real estate as an investment alternative? Here are some great options.
2. Real Estate Investment Trusts
Also known as REITs, these investments are very similar to buying a stock (since you can buy them under a ticker symbol through a standard brokerage account), but instead of investing in corporations that manufacture products or provide services, you’re investing your money in companies that own or finance income-producing real estate.
According to Forbes, some of the top REITs are:
- Blackstone Mortgage (BXMT)
- Omega Healthcare Investors (OHI)
- Medical Properties (MPW)
- City Office REIT (CIO)
- Piedmont Office Realty (PDM)
These REITs all have dividends greater than 8%.. (Before you shell out all your cash, remember that REIT dividend earnings are taxed at your regular income rate, and not at the capital gains rate.)
3. Crowdfunded real estate
Like the idea of real estate, but don’t want to deal with renter? Then crowdfunding might be for you. It’s completely hands off, and the returns are usually pretty constant.
It sounds great, but there are downsides to consider..
Once you invest, you’re committed for the long term—likely three years or more. If you have second thoughts, too bad. You’ll have to wait till the deal closes to get your money out of it.
That’s how it works in real life, so that’s how these crowdfunded deals work too.
If you’re interested, I like:
- Crowdstreet—The minimum investment is steep at $25,000, but there are many real estate investment options available.
- Fundrise—Invest in real estate deals with just $10.
- Yieldstreet—Choose an assortment of real estate deals, or alternative investments like art, short-term notes, private credit, or even crypto.
- Farmtogether—Crowdfund the purchase of farmland, and reap the rewards of the land lease and the ultimate sale of the properties. It’s a great model with solid returns.
And I know Deacon also likes:
- Streitwise—Get ownership in commercial real estate by investing in REITs.
- Groundfloor—Short-term, high-yield real estate debt investments.
- Diversyfund—Invest in real estate crowdfunding without being an accredited investor.
- Roofstock—Invest in crowdfunded single-family homes, short-term rentals, or an assortment of portfolios.
- RealtyMogul—Invest in private market offerings, private placemenets, and real estate investment trusts (REITs).
Read more: 17 Best Crowdfunding Real Estate Sites
4. Farmland and agriculture
If you’ve got the money, investing in farmland and agriculture can be a great business. But, you usually don’t make the big bucks until you sell the acreage years (or decades) later.
Here’s the typical process of a farmland purchase:
- Scope out farmland just outside of a growing city.
- Buy the farmland, keep it zoned as agricultural.
- Rent the land to a farmer to break-even or make a little money.
- Hopefully, the city expands over the years, making your land desirable for residential real estate.
- Then, simply sell the land to a developer for many times the amount you paid for it.
The process usually works well, but you have to be patient. And you’ve got to be okay with your money being tied up in land all those years.
5. Residential rental properties
This market is tough today, but there are still deals to be found. You’ve just got to be that proverbial dog on a bone—always looking, always talking to people, and being ready to make a purchase at a moment’s notice.
If you’re going to invest in single-family homes or multi-family units, the general rule of thumb is to get 1% of the purchase price in monthly rents for it to be cash positive.
If you buy a place for $200,000, you should get $2,000 a month to make it worth your while.
Then there’s vacation rentals. These can be lucrative, but there’s way more moving parts with potential home damage, cleaning fees, and the ebbs and flows of the vacation market.
Do the math before you buy—something like the below:
- Annual revenue
- (Rental rate per day) x (# of potential rental days) x (70% for unforeseen vacancies)
- Annual costs
- Maintenance (assume more than you think here!)
- Cleaning fees
- Your time (don’t forget this one—your time isn’t free!)
Will your revenues outweigh the costs? Will you earn at least 10% on your investment?
If not, keep looking.
6. Commercial real estate
Commercial real estate is often split into three categories:
- Office space
Each of these have their pros and cons, but all are investments for the long-term (we’re talking 5+ year leases for these).
If you’re considering purchasing commercial real estate, you’ll need to get comfortable calculating the capitalization rate of each (which is simply the net operating profit divided by the value of the property).
As a rule of thumb, a good cap rate is anything higher than 4%. Find this, and you might just have a lucrative investment opportunity.
7. House flipping
Don’t want to wait a decade to see a return on your investment? Have some experience in construction or project management? Then house flipping might be for you.
As a concept, house flipping is simple:
- Find a run-down property.
- Estimate what it would cost to fix it up.
- Forecast the value once it’s complete.
- Add in some margin for yourself.
- Then, make an calculated offer.
My sister and her husband have been flipping houses for nearly a decade now. They’ve never lost money and have made an average of $25,000-$40,000 per flip. It’s proven quite lucrative for them.
But, you’ve got to know what you’re doing—both with your calculations and with the reconstruction. If you let your emotions get in the way of good decision making, house flipping may not be for you.
Read more: A Beginner’s Guide to Flipping Houses
What to Invest in Besides Stocks and Real Estate
Not interested in real estate for your investment alternatives? Then check out the list below.
8. Buy into a franchise
This isn’t a set-it-and-forget-it investment. Most franchise models require you to be physically involved in the business.
Also, don’t expect to buy a franchise with no money down. There’s usually a start-up fee of over $100,000 or more.
Sound terrible? What’s the benefit?
Most of the top franchises have a model that has proven successful time and time again. And if you follow their steps, you’ll likely earn money. And lots of it.
According to Entrepreneur, the top franchises are:
- Taco Bell
- Jersey Mike’s
- The UPS Store
- Dunkin’ Donuts
- Ace Hardware
- Hampton by Hampton
9. Fine Art
Maybe you’re a lover of fine art and have a knack for what’s desirable and timeless (and therefore destined to become a priceless piece).
If this is you, consider investing a portion of your funds into paintings and holding onto them while they (hopefully) appreciate in value.
If you’d rather not spend tens of thousands of dollars (or millions for that matter…) on prestigious paintings, maybe you’re up for buying a portion of a painting through Yieldstreet or Masterworks instead.
It’s basically like investing in the stock market, but instead of owning a share of a company, you’ll own shares of a painting.
10. Peer-to-peer lending
Getting a loan is getting expensive these days, which is bad news for people that want to borrow money, but good news for you if you want to lend money.
Simply hop onto a platform like LendingClub, find the best lending options for you, and get started!
The minimum investment is $1,000 and the expected returns are between 7%–10%. Not too shabby for a fairly simple investment.
11. High-Yield savings account
Does the thought of investing your money into real estate or the stock market put an immediate pit in your stomach?
Or maybe you just want a safe place to put your money while you weigh your options?
Then a simple high-yield savings account is likely best for you.
With banks like CIT Bank or Upgrade, you could earn 4% or more on your money. And there’s basically no risk.
12. Certificates of Deposit
If you’re thinking about a savings account, but you don’t really need the funds for a year or more, consider a CD.
A Certificate of Deposit is basically a savings account, but your money is tied up for a specific term. In other words, if you invest in a 12-month CD, you can’t access those funds until after the year is over.
But, with rates of 4.5% these days, this option is actually quite enticing. I’m considering it myself.
Read more: 10 Best Short Term Investments
13. Treasury Bonds
Looking for other low-risk investments for the long-term? Treasury bonds may suit you.
T-bills (as their also called) are issued by the U.S. government. They’re currently paying 3.875% for a 20-year bond, and 3.625% for a 30-year bond.
This investment certainly won’t make you rich, but it will help keep the purchasing power of your money (as inflation continues to duke it out with your dollars).
14. Corporate bonds
Want to make more than 3%–4% (in Treasury bills), but still like the idea of bonds? Then take a look at some of the top corporate bonds.
According to Seeking Alpha, there are a number of corporate bonds offering a bond-yield of 4% or more. These include:
As you can see, these are big companies that aren’t likely to fail any time soon. It’s a fairly safe investment for a better yield than those T-bills.
Want to buy a corporate bond? It’s pretty simple. You can buy corporate bonds through a brokerage firm, the bank, a bond trader, or a broker.
15. Municipal bonds
Also referred to as “munis”, these are debt securities issued by government entities (typically states, cities, and counties), and they’re used to finance capital projects like building roads, public buildings, or even local schools.
How can you invest in municipal bonds?
Investing in municipal bonds is similar to buying corporate bonds—simply go through an online broker, see what’s available, and invest.
Some bonds mature in one to three years, while others might not mature for 20 or 30 years. Be sure to check the terms before investing.
What’s the typical return?
The current yields on municipal bonds are between 2.5% and 4%. Not amazing—but again, a pretty safe investment that earns way more than keeping your cash in your pillow.
“What about annuities? Surely those earn more than 4%,” you may be thinking.
Well, you’d be right. But surprisingly, not by much.
At this moment, most fixed annuity rates range from 5%–6%.
(Side note: You could also invest in variable annuities or index annuities, but those will fluctuate with the market and have pretty steep fees, so there’s no guarantee that you’ll earn any more with them.)
How to buy annuities
Annuities are mainly sold through insurance companies, but they can also be purchased through some banks, brokerage firms, and mutual fund companies.
If annuities interest you, I’d first see what your brokerage has to offer, then expand your search from there.
17. Hedge fund investing
A hedge fund is a professionally managed fund that trades non-typical assets at an attempt to earn above-average yields.
It’s a fund that doesn’t choose for a list of “ho-hum” stocks. Instead, the fund managers invest in more “sophisticated” financial investments.
They’ll trade in riskier areas like leveraged assets and derivatives like options and futures.
To buy into a hedge fund, you’ve typically got to be an accredited investor (which means you consistently earn over $200,000 a year).
How much will you earn with a hedge fund?
According to Forbes, the average hedge fund earned 7.2% in the 5-year span from 2017 to 2022. During that same period, the S&P 500 earned an annual average return of 17.05%.
So to sum it up, hedge funds are limited to high-income earners, and they still can greatly underperform the general stock market.
So yes, this is an option, but probably not a great one for most.
While researching for this very post, I was actually shocked to learn that the value of gold increased by an average of 7.8% per year from 1971 through 2022. (I figured it would be three or four percent.)
If you believe we’re heading into another flat decade for the stock market, then you might want to have a bit of gold in your portfolio. After all, it is usually a hot commodity (pun intended…sorry) when the economy is in turmoil.
How can you invest in gold?
As I see it, there are four basic ways to invest in gold:
- Buy physical gold.
- Buy mutual funds or ETFs that replicate the price of gold.
- Invest in futures and options in the commodities market.
- Invest in companies that mine for gold.
To buy physical gold, you’ll need to find a local dealer or head to a reputable site like JMBullion.
Mutual funds, ETFs, futures, options, and mining company stock can all be found online through your brokerage account.
19. Private credit investments
There are times when it doesn’t make sense for companies to get a traditional loan through a bank—either the interest rate is just too high or perhaps the bank isn’t willing to lend to them for a variety of reasons. So instead, the company may request funds from a private institution.
The institution may grant the loan, but perhaps they’d like to mitigate a bit of the risk and allow other investors to cover a portion of said loan.
This is where companies like Percent or Yieldstreet come in. They back the loan and then allow individuals to crowdfund it.
The big question—are private credit investments worth it?
Investments like these can yield an average of 9% annually, so it’s much better than a savings account (even a high-yield one), but there is additional risk involved.
If the borrowing company goes bankrupt, your money likely evaporates right along with it.
We’ve all heard of crypto by now.
- It was a “fad”.
- Then value of a single Bitcoin shot up to $60,000.
- The $60k valuation didn’t last and tumbled like a rock soon after.
- Now, the price of Bitcoin is hovering around $30,000.
So is crypto worth investing in? It’s tough to say.
You can’t analyze it like a company with income statements and balance sheets. It’s a currency.
Either you think it’s going to get stronger, so you invest—or, you think it will get weaker vs. other currencies, so you stay away.
Typically, currency trading is for short-term traders. It’s high-risk and I don’t recommend it. But, if you know the game and think the investment is sound, then by all means, invest away. Just be sure it’s a small portion of your overall investment.
21. Private equity funds
A private equity fund is similar to a mutual fund. It’s essentially a big pot of money that’s pooled together from a bunch of investors.
But, instead of investing in the stock market like a mutual fund would, a private equity fund typically put their money into longer-term investments (think ten years or more) and aims to earn higher yields.
Who can invest in private equity funds?
As you may have guessed, private equity funds aren’t available to just anyone. It used to be available only to investors that could pony up $25 million (If you’re reading this and you qualify, kudos to you!). For the rest of us, we’re glad these practices have evolved.
Today, investors can go through an investment app like Yieldstreet. While you don’t need $25 million, you’ll still need to be an accredited investor to throw your hat in the ring.
22. Venture capital/Equity crowdfunding
Want to help an aspiring entrepreneur get his or her business off the ground?
Want to invest and be part of the next big thing?
Then the world of venture capital might be for you.
Simply take your investment money to platforms like AngelList, CircleUp, or SeedInvest and choose what companies you’d like to fund.
You may be investing in the next Google or Facebook and strike it rich. But, more likely you’ll be investing in the next flop, so choose wisely and invest only a small portion of your portfolio here.
23. Invest in websites
I accidentally made $1,500 with a website a while back. I bought a domain name, posted three articles, lost interest, and then totally forgot about it.
Then, money got tight a few years later, and the site re-entered my mind. I took it to Flippa and someone paid me $1,500 for it.
While that money was nice, it’s possible to earn so much more with a website.
And I’m not even talking about 5-figure or 6-figure deals—there are websites that have sold for hundreds of millions of dollars.
If you’ve built up a successful website, consider doing it again. Maybe you start something from scratch, or perhaps you buy a site that has some history so you can build it faster.
Whatever your thought though, a simple website could be a big moneymaker and perhaps an excellent place for an investment.
24. Owning your own business
The website idea above—that’s a business. But there are obviously thousands of other options available to you if you’re thinking about starting a money-making venture.
- What do you like to do?
- Are people willing to pay for your product or service?
- Does it have longevity?
There are so many money making ideas that can be started for less than $100. If you’re willing to work it and put some sweat and tears into an idea, you could make hundreds of dollars a month, a week, a day, or even an hour.
Owning your own business is one of the top ways to build wealth outside the stock market.
So if you’re one of those people that would rather not invest in the stock market, that’s totally fine. Instead, invest in your own business. Invest in yourself.
Which leads us to our final investment idea—
25. Invest in yourself
Yes, you can invest in your own business, but that’s not what I’m talking about here. I’m talking about learning something new—about expanding your mind and improving yourself in the future, and therefore improving your odds of success.
Could this be going back to college? Maybe, but not necessarily.
It could be:
- Buying a self-help book
- Taking an online course
- Attending a conference in your area
- Getting certified so you can earn more at your job
Whatever it is, ask yourself what the return will be on your investment. After all, you’re spending money, time, and other resources to do this thing. Will it be worth it?
If you don’t know, don’t do it! Do some more research and continue asking yourself the question.
Investments Other Than Stocks: In Summary
It should be pretty evident by now that the stock market isn’t the only investment option out there. We just proved that 25 times over.
If you’re uncomfortable having 100% of your money in stocks, you’re one of the smart ones.
Instead, diversify a chunk of your money outside of the stock market.
In a world of fickle traders and ever-growing economic uncertainty, you’ll probably be glad you did.
Author Bio: Derek Sall founded LifeAndMyFinances.com back in 2010. He has a passion for people and money and can’t think of anything better than writing posts and building tools that make personal finance easier for everyone that’s interested.
Disclaimer: The opinions and recommendations expressed in this article are that of the author and are not intended to be financial advice. Please consult with a financial professional before making any investment decisions.
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