Talk to most people about investments and they think of things like retirement account options or maybe the stock market. Of course, there is always the problem of maxing out your retirement account contributions for the year. Plus, not everyone loves investing in the stock market beyond low-risk options like index or mutual funds.
What if you still want some kinds of investments to diversify your portfolio, so to speak? This is when you turn to more alternative investments, like physical investments.
Wondering what kinds of physical investment options you have? Keep reading for five popular choices.
1. Your Home
Your home is often the biggest of your physical assets and a primary investment. Ideally, you buy your home when prices fall. Then, you make some basic upgrades to the house and hang on to it for a while.
That might mean years or even decades. As a general rule, property gains value over time, which means you can sell it for a profit later or borrow against its value.
2. Rental Property
While a rental property is also real estate, it’s fundamentally different than your home. Owning rental property effectively makes you a business owner.
That means you incur different kinds of taxes on the property. You also hold different obligations in respect to it, usually defined by the leases that your tenants sign. Again, though, the property should accrue value over time and it provides a revenue stream in the meantime.
3. Precious Metals
Another popular alternative investment is for you to invest in metals. Precious metals are typically a less volatile investment than stocks, although you do see fluctuations in price. Events like a silver shortage will drive up precious metal prices, for example, while economic growth might lower prices as people look toward stocks for quick returns.
A big advantage of precious metals is that they tend to fare better against inflation and you can offload them fairly fast if prices rise enough.
4. Collectibles
Collectibles are an option for people with some expertise in a given area. A few common examples include things like artwork, comic books, and stamps. These are somewhat riskier since speculation can create bubbles, so you should invest when prices fall.
5. Wine
Some people prefer options like wine because, in the end, there is a finite amount of any given vintage. Rarity drives up values. Hang on to a rare or even semi-rare vintage for long enough and you can reap a tidy profit.
Physical Investments and You
Physical investments aren’t the first choice for many people. With the possible exception of precious metals, they don’t carry the same obvious value as money in the bank or in a trading account.
Physical investments can, however, often help shield you from the volatility you see in the stock market. Instead, these investments by accruing value more slowly over time. You will routinely see this with real estate investments.
Looking for more money and investment ideas or tips? Check out some of our other Finance posts.
