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5 Investment Ideas on Building Wealth

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in 2020 and beyond, building wealth is expected to go far beyond your typical nine-to-five job. Many investors (you may be one of them) aren’t aware of the alternative investment options available to them.

 Instead of putting all your hard-earned money in the same basket, consider these 5 alternative strategies:

1. Invest in a Rental Property

Difficulty: Hard

Time commitment: High

Money required: Medium ($10,000 to $100,000)

A drop in homeownership rates has led to a rental boom.

Purchasing a second property can be a great way to help boost your finances.

Rental investments can generate returns, plus benefit from any rise in the value of the property. However, it can be difficult to be a passive landlord. If you’re not interested in managing tenants and handling maintenance, you’ll need to hire a trustworthy property manager which can cut into your returns.

Also, if you’re looking to build equity, you’ll need to purchase a property in a market with a strong interest in rentals and/or vacation homes. Many online portals will give you a feel for the market, but you’ll need to build your own payback/investment model.

Lastly, forced appreciation can be one of the fastest ways to get the most out of your rental property. Forced appreciation is when a property owner increases the value of their property by taking specific actions—anything from gut-renovating a home to adding an extra bathroom.

With this said, renovations can be costly, especially if you’re not doing them yourself. If you do decide to go this route, make sure you do your homework and vet contractors before any work begins.

2. Invest in Alternative Assets

Setup: Easy

Time commitment: Short

Money required: Low ($5,000+)

Recent technology has resulted in increased access to alternative asset classes for individual investors. Alternative asset classes such as real estate finance, litigation finance, marine finance, art finance, and commercial finance allow for potentially strong returns with typically low stock market correlation and are backed by tangible collateral. Furthermore, their set durations and target yields offer the potential to generate income without the guesswork of timing when to enter and exit your positions.

They also require less time and energy than buying and managing physical investments such as rental properties.

In the past, alternative investments like these were typically exclusive to institutions, hedge funds, or ultra-high net worth investors.

Today, alternative investment platforms like Yieldstreet, are reinventing this model, allowing individual investors to access these investments for the first time.

For example, Yieldstreet offers investments in all of the asset classes mentioned above with target yields of 8-15%.

Build Passive Income with YieldStreet

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3. Invest in a REIT

Setup: Easy

Time commitment: Short

Money required: Low ($500+)

Investing in a REIT (real estate investment trust) is an alternative to purchasing and managing a rental property on your own. If you’re not familiar with what a REIT is, that’s OK. REITs are companies that either own or finance income-producing properties. Apartment or condominium complexes, shopping centers, hotels, and warehouses are a few examples.

When you invest in a REIT, you’re investing in a pool of real estate assets with other investors. It’s conceptually similar to a mutual fund. With a REIT, you don’t need a large amount of capital to invest with upfront. You also won’t need to manage the properties yourself. There are many types of REITs, so do your research before you make any investment decision.

4. Invest in a Franchise

Setup: Hard

Time commitment: High

Money required: High ($50,000 to $1 million)

Investing in a franchise can be another way to help diversify your investment portfolio and grow wealth. A franchise is a license you buy that allows you to run a business under the name of an already-established business. For example, a franchisee can buy a license to open up a McDonalds, Dairy Queen, or even a Holiday Inn.

One of the biggest potential drawbacks to investing in a franchise is that setting up one or two franchise locations may not generate enough income to make it worthwhile. You’ll probably need to open several locations for the investment to be worthwhile, which usually means a larger check size and time spent finding the right franchisor. To get started, you could attend a franchising trade show to get the lay of the land.

5. Peer-To-Peer Lending

Setup: Easy

Time commitment: Short

Money required: Low (less than $500)

Peer-to-peer lending or P2P has only existed since around 2005. Beyond being beneficial to those looking for financing, it can also be a good way to generate passive income for an investor.

Peer-to-peer lending is also known as social or crowdlending. It connects borrowers looking for alternative forms of capital with lenders (such as you). Minimums for on P2P platforms are often low and can potentially result in high returns. That is, higher than if your money was sitting in a traditional or high-yield savings account. Investing with a P2P platform does come with risk, so make sure to thoroughly vet both the platform and investment before leaping.

Not sure where to start?

Diverse and lucrative investment options do exist outside the stock market. That is if you’re willing to take the time to understand your options and go after them.

If you’re not sure where to start, one way is to explore YieldStreet’s online marketplace. We give accredited investors access to alternative investments. Our offerings are backed by collateral and target an 8% to 15% yield with durations ranging around 1-3 years.

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