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Welcome back, fellow parent

While I typically recommend focusing your investments on more “traditional” options such as stocks and bonds, there are many other ways to invest your hard-earned cash.

For this issue, we’re focusing on the top 6 alternative investments to consider this year. Each could offer a substantial return and help hedge against future market volatility.

Top Reasons to Invest in Alternative Investments

Alternative investments often include tangible assets such as real estate, commodities, and precious metals, as well as financial assets like private equity, hedge funds, and venture capital.

A few reasons to consider the below alternative investments:

• Diversification: Adding alternative investments to your portfolio can reduce risk by spreading your investments across various asset classes.

• Potential for High Returns: Many alternative investments offer the possibility of higher returns compared to traditional investments.

• Hedge Against Inflation: Assets like precious metals and real estate often increase in value over time, providing a buffer against inflation.

• Emotional Satisfaction: Investing in tangible assets like art or wine can provide personal enjoyment and a sense of ownership in something unique and valuable.

• Support Innovation: By investing in startups through angel investing, you can contribute to the growth of new and innovative companies.

Focus on investments you’re passionate about, especially as the alternative investments have lower liquidity, meaning it’s a bit harder to exit the investment if desired.

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#1: Artwork

If you love art but don’t have a ton of cash to purchase your own Picasso painting, check out Masterworks.

What’s cool about Masterworks is they essentially democratized purchasing fine art by allowing you to purchase shares of famous paintings. I’ve seen Picasso and Banksy paintings listed, which is pretty cool.

While they won’t let you hang the painting in your home, you’ll at least know you’re part owner. The art market has also grown quite a bit over the past several years, bringing in decent returns for investors. From what I can find online, minimum investments start at roughly $20.

Since Masterworks launched (they’re quoted as the first in this space), competitors have popped up. But Masterworks is still considered best-in-class and claims to only invest in the top 3% of paintings.

#2: Wine

The adage “age like a fine wine” can also be applied to investing in wine. Good vintages tend to appreciate over time, meaning you can earn some extra cash by investing in the right wine.

Vinovest is considered one of the go-to wine investment platforms from what I can find online. You’ll need at least $1,000 to start investing here, so keep that in mind before diving in. Vinovest apparently will help you build a wine portfolio and handle storage for you, which is convenient.

Investing in fine wine could help hedge against market fluctuations, as the value of wine isn’t closely tied to the stock market.

3. Peer-to-Peer Lending

Peer-to-peer lending can be extremely rewarding, and risky. Essentially you lend money directly to individuals or small businesses.

Expect returns to be as low as 5%, but on average will bring in roughly 9-10%. Prosper is one of the biggest players in the game, I’d start there. You can get started for as little as $25.

By lending directly, you can earn interest on your loans and have the satisfaction of helping individuals achieve their financial goals. I haven’t personally dabbled in peer-to-peer lending, but I’ve heard great things, and is on my investment plan.

4. Real Estate Crowdfunding

Real estate crowdfunding has revolutionized property investing, allowing you to participate in real estate projects without the need for substantial capital or the hassle of property management.

Platforms like Fundrise enable investors to invest in both commercial and residential real estate projects with a relatively low minimum investment. Fundrise advertises itself as a long-term investment, defined as 5+ years. It’ll take some time to exit, but you can expect to earn some extra cash along the way.

For what it’s worth, Nerdwallet gives Fundrise 5 stars when it comes to investing in real estate.

5. Precious Metals

Investing in precious metals like gold and silver is a time-tested strategy to hedge against inflation and economic instability. You can purchase physical assets (ex. silver coins) or invest through an ETF.

Gold, in particular, has had a great run over the past year. Check out Vaulted if you’re interested in buying and storing gold bricks. It’s well known in the space and is easy-to-use (according to reviews).

Precious metals carry a lot of intrinsic value for many investors, meaning its worth is more than strictly the potential monetary return.

6. Angel Investing

Angel investing is one of my favorite alternative investments as it is all about providing capital to early-stage startups in exchange for equity.

I love angel investing for two reasons. First, you can bring in high returns if the company succeeds. Second, it’s a chance to support innovation.

With the chance for greater returns comes greater risk. Proceed with caution and make sure to do your research and only invest in businesses you understand (and ideally enjoy).

A great place to start is AngelList, which helps connect investors with startups.

Another lesser-known way to angel investing is to seek out small businesses and startups in your area. You’ll be surprised what you can find - there are always businesses willing to trade equity for an influx of cash.

Thank You for Reading 🤑

Thanks again for reading - I hope the above was helpful in your financial journey.

If you have a moment, I’d appreciate you answering the one question survey below. It’ll help me research and send you information that matters most to you.

Talk soon,

The Dollar Dad

P.S. If you’re considering starting a newsletter or blog this year, I’d highly recommend Beehiiv (use my link for 20% off any paid plan for 3 months). Drop me a note if you need help getting started or growing your business.

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