Alternative investments are potentially a great way to diversify your cash. Though traditional investments are a great way to generate additional income, you may want to generate more income and diversify your cash pot further through best alternative investments 2020.
So, if you are looking at the best alternative investments 2020, there are a number of options and some of these are as follows:
Real estate crowdfunding
Apart from investing in physical real estate directly, you can make your money work by investing in a real estate crowdfunding platform. This option has become really popular over the years as you can invest in real estate without the experiencing the hassles of physically owning or managing properties.
Forex trading
Forex trading is one of the most common types of investments for traders which involves trading in currency pairs. Under forex trading, profit is made out of fluctuations in the value of currencies. As values of currencies rise and fall against each other, investors make money out of these changes in the value of currencies. Forex trading may be considered as one of the best alternative investments 2020 as huge volumes of currencies are traded every day. Apart from trading with currency pairs, investors can also trade with CDFs. These allow investors to speculate with the potential future values of currencies without having to buy them.
ICOs
Though ICOs or Initial Coin Offerings are relatively new to the market and involve considerable risk factors, they are becoming popular among investors. Such instruments represent the way companies get funding to make cryptocurrency or digital currencies. However, as Initial Coin Offerings also involve scams, it is necessary to identify viable projects from fraud ones. Therefore, it is advisable for investors to look for projects from reputed companies with a good track record that are good on paper and have decent chances of success on the ground. In the UK, there are no substantial regulatory criteria for ICOs, but projects are decided on per-case basis.
Peer-to-peer lending
This is also a relatively new type of investment and involves considerable risks. Peer-to-peer lending involves a network, in which people are connected to each other for securing loans. This connects people who have money to lend and those who need to borrow money. This system of lending money enables borrowers to receive money directly from lenders on the network, eliminating the banking intermediary. This network-based lending system enables lenders to receive a much higher interest rates compared with the interest earned on a savings account. As an investor, you can offer loans to those on the network who need to borrow money, through the peer-to-peer lending platforms or websites, which charge a fee. The system should ideally work for all parties involved. However, the risk lies with the borrowers. If they are not able to access a traditional loan, it means they have a poor credit history or they may not be eligible for conventional loans. Investors can make hefty profits out of their investment into this type of lending process and earn a regular and steady income. But it is necessary to do the background check on borrowers. However, you need not investigate the past track record of each potential borrower to which you may lend money and only need to pick the most reliable websites or platforms to ensure the security of the investment. These secure websites or platforms will do the background check on the borrowers. Such websites check the credit history, do risk assessments and also take care of the repayment process.
Commodities
A commodity is considered an economic good or service. Investing in commodities include precious metals such as gold, silver and platinum which are among the best alternative investments 2020 and provide a hedge against the current climate of economic uncertainty. Apart from investing in precious metals, some of the other best alternative investments 2020 include commodities such as crude oil, natural gas, ethanol, corn, soybeans, wheat, cocoa, coffee, sugar, etc. As an investor, you have two options for investing in these commodities, either you can buy these items in ETFs on your investment platform or buy precious metals such as gold and silver in their physical form.
Gold has traditionally been a popular option for investors and continues to be one of the best alternative investments 2020. The scarcity of gold makes it one of the best alternative investments 2020 options among investors as it creates a huge gap between demand and supply. This precious metal has been a popular option among investors since it acts a safe-haven for investors in times of economic volatility as investors tend to seek shelter in this precious metal during market instability. The fact that the precious metal provides a consistent hedge against inflation, makes it a formidable part of any investor portfolio. Gold usually tends to perform well as an asset whenever there are economic or other uncertainties globally. Apart from strong demand for jewellery and asset allocation in investor portfolio, the yellow metal is an attractive investor option as it has a wide range of industrial uses. Though to a relatively lesser extent, the other two common precious metals – silver and platinum – are also among the best alternative investments 2020 which are worth considering for any potential investor this year. These precious metals are much cheaper than gold and ensure handsome returns for investors, making them one of the best alternative investments 2020.
Cryptocurrency
This is a relatively new type of investment which involves digital currency that has gained in popularity among investors over the recent years. Though there have been demands to regulate trading in cryptocurrencies due to the nature of crypto trading such as the volatility associated with trading in digital currencies, they are still one of the most popular options among investors. Though some of the hype surrounding these virtual currencies has slowed down recently, blockchain projects involving cryptocurrencies still continue to be popular. Some of the most common cryptocurrencies include Bitcoin, Ripple, Litecoin, Ethereum, etc. which continue to be in demand among investors.
To sum up, understanding the risks and benefits holds the key to a successful investment and risk should be evaluated at a portfolio level rather than at an individual asset level.
