Investments to Consider Beyond Traditional Real Estate and Stocks

The current market scenario is the most volatile we have seen in decades. From election cycles to inflationary pressure, it has become impossible to count on solid returns solely from traditional investment methods like residential real estate or stocks.

Diversification is necessary for long-term stability and growth. If you’re on the fence about alternative investments, here’s a case for you to consider the next generation of investing trends (along with some suggestions to get you started).

The case for alternative investments

Traditional asset classes include bonds, cash, treasury bills, and the stocks and physical residential real estate mentioned above. These are classic forms of investment that have historically offered solid, reliable returns.

However, the modern market has become so turbulent that it is difficult to predict that a stable portfolio of traditional assets will be sufficient. Many practitioners predict that the classic 60/40 stock/bond portfolio will not be able to perform at previously anticipated levels and that a broader set of asset classifications is needed to create stability and the potential for robust growth over time. .

This is where alternative investments come into play. These are assets that do not conform to traditional formats. To be clear, this does not automatically mean they are at higher risk. On the contrary, technology has opened doors for the average investor to access a variety of safe investments previously inaccessible to the average retail investor.

Next Generation Investing Trends

True wealth building in the 21st century requires a more diversified portfolio. Here are some alternative investments that are paving the way for the next generation of wealth creation.

Mineral and royalty interests

In most areas of the world, governments own and control all mineral interests – a term that refers to underground real estate that begins about 100 meters below the Earth’s surface and extends to the Earth’s core (along with all natural resources contained therein). .

The United States, however, is unique in allowing citizens and corporations to own these interests, along with the lucrative lease bonuses and royalty streams that accompany them, if and when natural resources such as crude oil or natural gas , are discovered and extracted. of the property.

Despite the legality of holding these interests, potential investors in the mineral and royalty rights industry have historically encountered very high barriers to entry, including high

capital requirements, complicated bond review processes, and other legal challenges. Tokenization technology has allowed companies like Mineral Vault to offer security tokens that represent fractionalized interests in mineral properties, opening up this previously out-of-reach asset class to domestic and international audiences.

This new approach to investing drives greater demand and potential returns from

energy industry. While the technology to access investment is innovative and new, this form of real estate is pre-existing and established. It benefits from immediate and stable cash flow from wells already in production, offers potential for appreciation as new wells and leases are brought into operation in the future, and includes built-in inflation protection as extracted hydrocarbons are sold at lower prices. spot every month.

Commercial Properties

In the same vein as mineral interests, commercial real estate was previously a high-profile investment vehicle. However, digital technology allows small investors to access this asset class.

One example is the PropTech company RedSwan. The commercial real estate platform tokenizes large properties, allowing investors to invest at relatively low entry points.

The emphasis here is to support a digital asset with physical support. This gives the asset a more sustainable trajectory than something purely digital (and therefore more volatile) like a cryptocurrency or EFT.

Likewise, platforms like Fundrise and RealtyMogul have made it easier for small investors to finance commercial real estate projects. These platforms provide access to high-quality properties, such as office spaces, shopping centers and multifamily developments, traditionally available only to institutional investors. This democratization of commercial real estate investing allows individuals to diversify their portfolios across a class of tangible, income-generating assets without the usual barriers of high capital requirements or market knowledge.

Commercial real estate investments can act as a hedge against inflation. As inflation rises, incomes typically follow suit, helping to preserve the value of the investment over time. This stability, combined with the increasing accessibility of tokenization and crowdfunding platforms, makes commercial real estate an attractive option for diversifying beyond traditional assets.

Private equity and venture capital

Private Equity is developing similar tokenized platforms, allowing those with limited resources to fund angel investments and venture capital ventures.

Both areas traditionally offer high returns. The only difference now is that technology makes them accessible to more people – and in different ways.

The Zoniqx platform, for example, uses multiple digital currencies, such as Ethereum for advanced smart contracts and Ripple for fast, low-cost transactions. These allow diverse investors to contribute to the private equity sector on their terms.

These are just three of many different options in this evolving area. There are many other options if you look for them, such as sustainable ESG investments and culturally relevant assets such as art, collectibles and luxury items. The key is to look for assets that use technology to access historically stable investment vehicles.

Practical tips to get started

If you see the value in next-generation alternative investments but aren’t sure how to pivot your investment strategy, here are some tips to get you started:

• Assess your risk and compare it to the amount of time you have before you start enjoying your investments.
• Consider your financial goals and make sure they are up to date.
• See where your current investment will take you and make a data-driven assessment of how much you need to improve.

Use these steps to get a clear idea of ​​what you really need to accomplish. This serves as a springboard for researching alternative investments and deciding which ones fit your risk tolerance, timeline, and diversification needs.

Next generation investing is the future. It represents investors’ willingness to remain open-minded, resilient and ready to adapt to change. If you want to keep up with this ongoing evolution, take the time to consider these cutting-edge alternative investments and make an informed decision about how they should be factored into your long-term wealth-building investment strategy.