Are you looking for alternative investment ideas, as most of us hardworking mere mortals are? Instead of putting your savings into the usual Bond and ISAs, stocks and shares, look at creative alternatives.
What are alternative investments though? It is a catch-all term that is anything from your typical cash or mainstream property.
The fact that there is a multitude of alternative investment opportunities does not necessarily mean all of them are good, advisable or safe. You need to understand the risks involved before you look at considering any type of investment. From lotteries to crowdfunding, stamps and coins to fine wines, here are some good alternative investment ideas.
Crowdfunding
Why would you rely on angel investors and venture capital trusts, when you can use crowdfunding? In the UK alone over £72 million was raised by platforms like Angels Den and CrowdCube from participating investors. Previously, only venture capital firms could invest, but these types of crowdfunding platforms allow any investor to peruse thousands of opportunities.
How does it work though? A business will launch a crowdfunding campaign offering large numbers of investors to invest in return for an equity share. Should the company go public or get bought out, invested parties could make a big return on their investment.
It carries as much risk as any investment and if you are a sophisticated investor, you will understand that. It is like an experiment; you try something which may or may not work. The big successes pay for the ones that fail and there’s no shame in it.
Woodland Investments
Land is becoming more scarce and more valuable every year. Buying a plot is, in general, a very good medium to long term investment plan. If you buy woodland you have capital growth potential but you can also earn an income from managing the forest for timber.
Most of us don’t know anything about woodland; how to value it, what protections it might have, how and what to plant, how to harvest or where to sell the timber. However, there are a few specialist forestry investment advisors out there who can provide this expertise to you. This will help you buy the right plot for the right price and then manage it in the most profitable way.
With specialist support, investing in woodland is relatively straightforward. It is important an investment decision makes sense on paper, but with woodland, you also have something to fall in love with and get excited about. Imagine your own private woodland glade with little bunnies and maybe deer frolicking in the sun! Much more satisfying than a boring stock portfolio. You can’t roll around in a gold investment but you can roll, run and walk through your forest.
Fine Wines
Since 2013, the value of wine continued to rise by more than 20%, making it a worthwhile investment provided you know which wines to buy. You will only be successful when you can identify wines, so do some wine tasting tours and connect with wine investors.
A good source is to make use of vintage reports that share growing seasons, harvest conditions, region and grape types. In addition, you have wine apps with massive wine databases, listing worldwide wines with all their key information. It will take approximately five years before you see a return on investment, but it certainly is a lucrative investment opportunity.
When investing in good wines it either it rises in value or it fails. In the case of the latter, you can drink it. A sure win-win situation!
Peer-to-Peer Lending
Peer-to-peer gives you the opportunity to loan money to others via online platforms such as Lending Works, Prosper, Funding Circle, RateSetter and Zopa. A peer-to-peer lending company is FCA regulated and the platforms are safe. ID and credit checks are performed, as well as direct payments, set interest rates including payment for your returns.
Why peer-to-peer? You can set higher interest rates opposed to savings accounts and ISAs’ you decide ultimately who you lend to and if you want to spread the risk to lend to many. If you want to free money, you can invest as little as £10 and you can withdraw your funds if you want your money. The risk, however, is that a borrower can go bankrupt and cannot repay you. You need to make sure that you check the bad debt rate of any website before you consider investing.
Robo Investing
Everything is done online these days, a fact which is greatly appreciated, whether it is reading alternative investments, checking bank accounts or buying groceries. This is very encouraging for online investments as well. Where you had to meet a financial advisor, fill out forms and share your appetite for risk, time-pressed Brits invest with as little as £1 with a few laptop or phone taps.
This is called robo-investing, which is all about accessible investment and cutting fees. Research showed that the 18 – 34 age group is more likely to engage in robo-investing. 77% of this age group wants to increase their investment amounts while 33% invest their entire ISA allowance. One in five Brits that do robo investment is confident in achieving better returns compared to company pension schemes.
Martin Stead, robo-adviser Nutmeg’s CEO adds: “ We give high-net-worth wealth management and investment management via the internet – we talk in plain English, cut fees, make everything accessible and transparent with simplified pricing – all of which are badly lacking in investments.” Robo launched in 2011 and delivered a 41.1% return for the past five years.
If you like the idea of a robot telling you what to do with your money, well why not but beware of too low fees being advertised. Often when something sounds too good to be true, it is just that!
Coins
You need to buy your coins at a reputable auction house and keep in mind that a coin’s value is underpinned by the collector’s idea of value. Do your homework and make sure you are not buying a forgery. Take for example the UK’s most valuable coin, the 1933 George V penny that is currently valued at £72,000. When coins interest you, take time and check out websites like Coin Hunter.
Stamps
While it might sound like something the older generation used to do or your grandfather perhaps, you always have stamp collectors. You will get stamps valued at six and seven-figure sums. At present Stanley Gibbons is dominating the collectable stamp market by offering collectors ready-made portfolios that start at £10,000.
If stamps sound like your thing, still beware of the way that stamps are valued and where the source comes from and know that you will have to go according to Stanley Gibbons’ catalogues.
While these are a mere drop in the bucket, alternative investments contain everything that are outside property, bonds and equities. Experienced investors with an appetite for risk are more likely to invest a small portion in alternatives. Traditional alternatives include private equity, hedge funds and commodities like oil and gold, but as you can see, investments are far larger and diversified than that.
If you are a risk taker or simply investing in what you love or know, then alternatives might appeal. Aside from jewellery, luxury handbags and classic cars you can even let your money grow on trees – literally, by buying woodlands. International sporting events tickets are another sure way to alternative investment. Forestry, for example, delivered double-digit returns annually from 2009 to 2014, as released by the Forestry Commission.
Alternative investments are incredibly attractive for the diversification they offer, especially in light of the low correlation with other traditional asset classes like equities and bonds. In plain English, alternative investment values are far less likely to fall or rise in sync with share and stocks. Therefore, when the global markets take a dive, there are reasonable chances that alternatives will not suffer to the same degree.
