Alternative Investments – 4 Options Outside the Stock Market

Jeremy BiberdorfBy: Jeremy Biberdorf

August 27, 2018August 27, 2018

Alternative Investments- 4 Options That Don’t Involve the Stock Market

Alternative investments are a great way to build wealth!

Yes, the stock market is a great way to invest your money. However, there are plenty of options available that are just as good or better, allowing you to diversify your investments more completely than you can achieve with Motley Fool stock picks.

What is an Alternative Investment?

Wikipedia defines alternative investments as “investment in asset classes other than stocks, bonds, and cash.”

That definition opens up a huge amount of asset classes that you can use to grow your money exponentially, without exposure to Wall Street equity markets.

Why Should You Consider Alternative Investments?

If you experienced the great recession (or any other market crash), you understand that investing in just one asset class, like stocks, can expose you to huge losses when the economy goes south.

On the other hand, alternative investments allow you to diversify away from the market into other assets that might hold their value better in a bad economy.

I know when the Great Recession hit a few years ago, my stock portfolio got hit pretty hard.  That’s when I decided I should start looking for other investment options to improve my finances.  I felt I was too exposed by having all my investments in the stock market.

4 Alternative Investments to Consider

There are a ton of alternative investments available.  Some are extremely complex, others as boring as watching paint dry.  But you can definitely find one (or more) that fits your investment management style.

Here are 4 options you can check out and see if they’re right for you (I use three of these myself!).

Peer to Peer Lending

Peer to peer lending is a relatively new concept in alternate investments.  Instead of going to a traditional bank to take out a loan, borrowers can go to sites like Prosper and Lending Club to borrow money for personal or business purposes.

Funds for the loan are provided by investors like you hoping to get a return on their investment. As a peer to peer loan investor, you can make a pretty nice return on your money depending on how much risk you decide to take on.

The great news is that you have complete control over how much risk you want in your loan portfolio.  You can choose from a number of parameters to determine who you want to lend to, and how much.  Also, you can diversify your investment over a large number of loans to reduce risk, instead of loaning large amounts of money to just a few people.

You can find out more about Prosper here.

Find out more about Lending Club here.


This one is a bit controversial.  Some will tell you that investing in cryptocurrencies like Bitcoin and Ethereum is closer to gambling than investing.  At this point, that argument is probably at least partly true.

However, just because digital currencies are the new kids on the block doesn’t mean you shouldn’t consider them as an investment.  As time goes on, crypto will become more and more mainstream.

As adoption increases, so will the value of cryptocurrencies.  In fact, as I’m writing this post, many Wall Street institutions are working to get Bitcoin ETF’s approved by the SEC.  Once that happens, that’s another step in increasing the legitimacy of crypto, and a huge step toward increasing value.

Those who get into crypto early have the biggest potential for huge gains (or huge losses!).  You must realize that this is a very risky investment, but the potential payoff is huge.

If you invest, your best bet is to put in a small amount of money that would not ruin you if you lost it all.

I’ve had a little money invested in cryptocurrencies for about a year now, and I believe it will do well over the long term, despite some huge short-term fluctuations in value.

Real Estate

I love real estate as an alternate investment!  A few years ago, I bought a small house, fixed it up, and flipped it for a 14% profit in 9 months.

After I sold it, I put the proceeds into a nice little rental house that generates a nice cash flow every single month!

I prefer to pay cash for my real estate investments.  Although, I know many people who would rather use leverage (loans) to buy real estate, which is more risky.

However you decide to do it, real estate can provide a nice return on investment, plus a monthly cash flow to live on or reinvest.

I paid cash for my houses through my Self-Directed IRA account.  The monthly rent check gets reinvested into mutual funds every month, and eventually I’ll snowball that into another rental, then another, and so on until I’ve built my own real estate empire!

Invest in Yourself

I believe that investing in yourself is the overall best investment you can make, period.  Think about it- when you’re in a constant mode of self-improvement, you can’t help but increase your net worth once you put that knowledge into action.

For instance: I’m a practicing dentist.  Over the years I have invested in learning new skills and procedures that many other dentists don’t do.

Because of that, I estimate that I’ve made hundreds of thousands of dollars more over my career than if I didn’t possess these skills.  That translates into more money I can invest and grow exponentially over time using other investment vehicles.

Constant investment in yourself easily translates into more wealth over time.  It’s the highest return investment you can make!

Got any ideas for other alternative investments?  Leave a comment and tell us your favorites + why you love them!

alternative investmentsAuthor Bio: I’m Dr. Jason Cabler, owner of the Celebrating Financial Freedom blog.  I teach people like you how to manage your money better, get out of debt, make more money, and do it all from a Christian faith perspective.

Jeremy Biberdorf
Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He's a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.

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