When people think about investing their money, the first thing that comes to mind is the stock market. Everyone knows about the stock market, and plenty of people have invested or are planning to invest in it. But have you ever thought of investing in other industries aside from the stock market? Don’t get me wrong; the stock market is a great place to invest. There are several advantages to investing in it too, such as:
- You can invest with as little as $50
- It is liquid, meaning you can buy and sell it easily, and
- It can give you annual returns of as high as 10%
However, returns are not always guaranteed. The stock market is highly volatile, it is not stable, and it goes up and down very often. Meaning you can lose as much money as you gain. That’s why—although investing in the stock market is great—you shouldn’t invest all your money into it. If you’re really serious about investing, you have to be a smart investor, and a smart investor knows how to diversify.
As I mentioned, the stock market is highly volatile. The likelihood of it crashing now and then is high. Which puts you in for losses. To minimize your losses, you have to diversify. That means investing in more than one industry and investing in things other than the stock market. So when the stock market crashes, you have your other investment to support you.
Remember that losses are inevitable; you will experience losses. You can’t avoid it, but you can definitely minimize it. Diversifying your investments is the best way to minimize losses and expand your portfolio too. Now, you’re probably thinking, “where else should I invest in?” Here are x industries that you should consider investing in, aside from the stock market:
1. Real Estate
People aren’t familiar that you could invest in real estate. Real estate properties are one of the best industries to invest in because it is tangible, it is a good source of passive income, it has tax advantages, and it can be safely and cheaply leveraged to boost returns. It may not be as liquid as stocks, and it costs more to invest in real estate. But it is more stable, with much higher returns, and is a great long-term investment.
Real estate is a great investment to pair with your stock market investments because the two are complete opposites. The stock market is volatile, but it allows you to withdraw your money at any time. So it becomes a great source of immediate income. On the other hand, real estate has higher returns but isn’t as liquid as the stock market. This is fine because it’s a more stable source of income, it doesn’t suffer the same volatility as the stock market, and you will get more out of it in the future. So even if the stock market crashes, you will still have income coming from your real estate investment.
2. Farmland and Agriculture
Farmland is technically a kind of real estate. But instead of homes, apartments, office buildings, and retail, it’s about crops, livestock, and sometimes even urban farming. The great thing about farmland specifically is that, unlike real estate (where the commodity is the property itself), farmland allows you to commodify the things that grow in it. So aside from earning from the land itself, you could also earn from the produce. Another great thing about it is that it’s a hedge against inflation, so you don’t have to worry about losing more money when inflation occurs.
This could be a personal business, a franchise, or you could choose to be a lender (P2P or peer-to-peer). Investing in your own personal business is also a great idea because it’s a direct income source. You have more control over it, and you can even choose to sell it or turn it into a franchise in the future.
If you choose to be a peer-to-peer lender, you basically lend money to other people who want to start their own business. The chances of you walking away happy from this are pretty high because lenders are often paid back. You have to hope that the business you’re lending to doesn’t default. You can always avoid those kinds of businesses by doing your own personal research on the businesses you want to lend to.
Look, in the end, any investment has a risk. There’s no escaping risk, but you can minimize it by diversifying your investments. If you want to earn more money by investing, be a smart investor. Don’t invest all your money into stocks. You need alternative investments to minimize your losses.