9 Best Alternative Investments 2021 (Make $1,000+ Per Month)

Disclaimer: This post may contain affiliate links. Please read my disclosure for more information.

the millennial money woman blog post "best alternative investments"

The stock market is likely the most common way to invest your money – but it certainly isn’t the only way to invest.

A recent trend is seeing many investors look for the best alternative investments to grow their net worth.

In fact, about 65% of American adults invest their money in alternative investments.

65% of American adults invest their money in alternative investments

Source: Nerd Wallet

Investing in the stock market certainly is attractive, but recent market volatility may have scared some investors and moved them over to alternative investment platforms.

One of the main reasons why American investors are moving to alternative investments is to diversify, where more than 4 in 10 Americans (44%) prefer alternative investment products for diversification purposes. 

More than 4 in 10 Americans prefer alternative investment products for diversification purposes

Source: Nerd Wallet

Remember the saying: Never put all of your eggs in 1 basket.

The same goes for your investments.

Sneak Peek: Best Alternative Investment Platforms


Best Cryptocurrency Trading Platform: Coinbase

Best Real Estate Investment Platform: GROUNDFLOOR

Best Fine Arts Investment Platform: Masterworks

What is an Alternative Investment?


Alternative investments have become a popular option lately for investors to grow their money and diversify their portfolio.

As you can see, the term “alternative investments,” is not specific and describes a very broad range of investments, such as:

  • Stamps
  • Jewelry
  • Artwork
  • Farmland
  • Real estate
  • Private equity
  • Precious metals
  • Cryptocurrency
  • Other collectibles

Typically speaking, only high net worth investors used to resort to alternative investing.

For example, well-known institutions like Yale University have invested up to 77% of their endowment fund in alternative investments.

Yale University has invested up to 77 percent of its endowment fund in alternative investments

Source: Yale University

Thanks to technology and the booming financial industry, alternative investments are now a feasible investment option for regular investors (like you and me).

What are the Best Alternative Investments?

Remember to do your research before you financially commit to one investment over another.

So, are you ready?

Let’s dive right in.

best alternative investments: cryptocurrency

Cryptocurrency


Investing in cryptocurrency 
could be a highly profitable alternative investment idea.

In fact, Bitcoin (one of the most popular cryptocurrencies) had an investment return of 302.8% in 2020. 

You can trade, buy, sell, earn high-interest rates, and even take out loans on your cryptocurrency with the following 2 platforms:

Coinbase is likely the more popular of the 2 crypto trading platforms (the company also just had an IPO – initial public offering – which means they are now publicly traded on the stock market).

BlockFi is likely the lesser-known cryptocurrency trading platform – but likely the one with more options. 

With BlockFi, you can have access to services including:

  • Trading your cryptocurrency
  • Taking out loans on your cryptocurrency
  • Savings account for cryptocurrency with up to 8.6% APY
  • Signing up to a Bitcoin credit card, where you earn 1.5% back in Bitcoin

Cryptocurrency is volatile and certainly risky – as with most alternative investments, but if you’re not going to stay up at night worrying about money, then crypto might be worth the investment.

best alternative investments: real estate crowdfunding

Real Estate Crowdfunding


Real estate crowdfunding is one of the more popular alternative investments.

Essentially, you are the “bank” with real estate crowdfunding, where you loan out money to others in exchange for interest payments and then hopefully a return of your original investment. 

Does it always work out?

No. 

But, real estate crowdfunding does have some pros (and cons), which I have listed below:

Real Estate Crowdfunding Pros Real Estate Crowdfunding Cons

Portfolio diversification

High loan default rate

Potential for high profits

Illiquid investments

Potential for passive income

Long term investments

If you want to take a shot at real estate crowdfunding, then you may want to check out GROUNDFLOOR.

With as little as $10, you can start investing in real estate projects with GROUNDFLOOR. 

If you’re an investor through GROUNDFLOOR, your money will likely be used for projects like:

  • Flipping
  • Renovation
  • New construction

Although real estate crowdfunding deals are risky and highly illiquid, you could see average returns of up to 10.5% on your investment, which isn’t too bad. 

Plus, if you invest $10 and lose that money, at least it’s “just” $10 and you are a bit more experienced in real estate crowdfunding. 

Best case scenario, you make money on your $10 with GROUNDFLOOR.

best alternative investments: fine arts

Fine Arts


If you are looking for a fairly “out-there” alternative investment, you may want to turn to fine arts, antiques, and other rare collectibles. 

In fact, a recent survey revealed 86% of wealth managers recommend investing in art.

86 of wealth managers surveyed recommend investing in art

Source: Deloitte

If you’re lucky and you have a good eye for art, then you may be able to make some serious profit with your fine arts alternative investments.

Here’s how my grandfather made an unexpected $20,000 profit from investing in art:

Back when he was in his 20’s he went to a yard sale, looking to decorate his newly purchased home with artwork.

He found a beautiful, hand-painted, small picture frame of a vase and a flower, which he decided to purchase for $5.

After 60 years, one of my grandfather’s friends, a keen art collector, noticed the picture, which was hanging in his dining room. 

The friend told my grandfather to have the painting appraised and the appraisal found that the painting was worth just over $20,000!

This is a story of pure luck – but it certainly paid off. 

If you’re passionate about:

  • Art
  • History
  • Investing
  • Making money

…Then you may want to check out the Masterworks art investment platform.

Masterworks is an alternative investing platform, which makes investing in artwork easy and available to almost everyone.

Just like an investment app, Masterworks allows investors to buy fractional shares of fine art – even if the art costs $100,000+!

If there’s a profit to be made, you’ll get a piece of the winnings!

best alternative investments: peer-to-peer lending

Peer-to-Peer Lending


Peer-to-peer lending (aka P2P) is another pretty nifty way to diversify your portfolio – all while potentially earning passive income!

If you’re a P2P investor, then you’re not investing in assets.

You’re actually investing in debt.

Then again, as with most alternative investments, there is the risk of losing everything. 

That’s just the name of the game. 

However, P2P investing is becoming pretty popular, with roughly 26% of Americans using P2P lending services.

26% of Americans said they used a P2P platform in the past

I’ve listed some pros and cons of the P2P alternative investments below:

P2P Pros P2P Cons

High potential for profit

High loan default rate

Could be completed online

Illiquid investments

Potential source for passive income

Long-term timeframe

If you want to take the leap and invest with peer-to-peer lending platforms, then I’d suggest checking out PeerStreet.

PeerStreet is arguably one of the most popular P2P investing platforms, where you can invest in real estate loans in:

  • Residential properties
  • Single-family properties

In fact, PeerStreet offers its own Self-Directed IRA to take advantage of tax-advantaged P2P investing – which I think is pretty awesome.

best alternative investments: precious metals

Precious Metals


Precious metals are great alternative investments to diversify your portfolio – especially during tough economic times. 

Precious metals could include:

  • Gold
  • Silver
  • Copper
  • Platinum
  • Palladium

The downside to precious metals as an alternative investment is that these investments are illiquid – if you buy them in physical form. 

The downside is that buying gold (or other precious metals) could still be risky.

Thanks to technology, however, you can start investing in precious metals using online ETFs (aka Exchange Traded Funds) with ticker symbols like the following:

Precious Metal ETF Ticker Symbol

SPDR Gold Trust

GLD

iShares Silver Trust

SLV

Aberdeen Standard physical Platinum Shares ETF

PPLT

Granite Shares Gold Shares

BAR

Invesco DB Precious Metals Fund

DBP

…And the list goes on.

Keep in mind that most of the precious metal ETFs have pretty high expense ratios (which means you pay more money to invest in these funds). 

What if you’re really into precious metal alternative investments?

There’s another neat trick where you can invest in precious metals – with tax advantages…

…And that’s called a Self-Directed IRA (aka SDIRA).

Rocket Dollar is a platform where you can open an SDIRA.

With Self-Directed IRAs, you can invest in alternative investments including:

  • Real estate
  • Precious metals
  • Cryptocurrencies
  • Passive interest in business partnerships

…and much more.

Below are some pros and cons of Self-Directed IRAs:

Pros Cons

Tax-free growth

Lack of control over your investments

Creditor protection

Lots of paperwork

Potential for a high return on your investment

Higher fees

If you know what you’re doing, an SDIRA could be good for your portfolio.

If you don’t know what you’re doing, then I’d suggest to either learn more about SDIRAs or consider another alternative investment where you’re more familiar.

One of the best Self-Directed IRA platforms out there is called Rocket Dollar.

Rocket Dollar is a platform that helps you set up Self-Directed IRAs and invest in a myriad of different alternative investments.

Below are the investment accounts you can use with Rocket Dollar.

As you can see, you’re not just restricted to opening a Self-Directed Traditional IRA or a Self-Directed Roth IRA.

With Rocket Dollar, if you’re a business owner, you can also set up a:

  • Self-Direct SEP IRA
  • Self-Directed Solo 401(k)

Below are some benefits when it comes to opening a precious metals Self-Directed IRA with Rocket Dollar:

Benefits of a Precious Metals SDIRA

As you can see, there are many benefits when it comes to opening a Self-Directed IRA – as long as you do your research and are comfortable investing in alternative investments like precious metals. 

Are you ready to open your SDIRA with Rocket Dollar?

I’ve created a step-by-step guide, below:

How to Open a Self-Directed IRA [SDIRA]

Opening a Self-Directed IRA is not too difficult. 

However, I should warn you that if your goal with your new SDIRA is to exclusively hold precious metals, then there may be some IRS requirements you may have to follow.

With an SDIRA, you could own the following precious metals (assuming their levels of purity comply with IRS standards):

  • Gold
  • Silver
  • Platinum
  • Palladium

As always, make sure you do your research before you start investing in alternative investments.

best alternative investments: private real estate investment trusts

Private Real Estate Investment Trusts (REITs)


Investing in 
private REITs is one of the popular alternative investments.

With REITs, you invest your money and you don’t have to do any of the dirty work (like collecting rent). 

Here is what you could be collecting with REITs:

  • Passive income
  • Profits from a REIT sale

Just like other alternative investments, REITs can diversify your portfolio and help you earn steady passive income

You can invest in private REITs over public REITs, and you could see higher potential returns. 

Here’s why you may want to consider investing in private REITs as your alternative investment choice:

Private REIT Pros Private REIT Cons

High dividends

Low liquidity

Minimal to no daily market price volatility

Typically higher fees

Typically high returns

Lack of transparency

One of the more popular private REIT options is known as Fundrise.

With Fundrise, you can become a private real estate investor for a minimum investment of $500 (which is a great deal, considering most private real estate deals begin at $5,000 to $100,000+).

Below are some stats for Fundrise:

Fundrise

Average Returns

8.76% to 12.42%

Average Fees

1%

Investment Minimum

$500

Investor Requirements

None

Just remember that the investments with Fundrise can be illiquid (meaning it could take a while for you to get your money back – if at all) and long-term.

best alternative investments: mortgage refinance

Mortgage Refinance


Although your home is not exactly a risky alternative investment, real estate does fall under the definition of alternative investments.

Especially in 2021, the real estate market is booming and it will likely continue to appreciate in the upcoming years. 

Some ways you can invest in your home:

  • New roof
  • New windows
  • Improved garden 
  • New air conditioning unit

Another way you can potentially save money on your home is by refinancing your mortgage

Refinancing often helps you save money because you are lowering your interest rates on your mortgage.

If you want to refinance your mortgage, you should consider looking at LendingTree, which is one of America’s oldest financial platforms.

Below are some tips that I have used to justify refinancing my own home back in 2020 when mortgages were so low:

  • Your interest rate lowers by more than 0.50%
  • You don’t plan to move within 5 years of refinancing
  • You pay minimal fees (typically you should pay 2% of your current mortgage)

For my situation, refinancing made sense – and I saved about $120 per month ($1,440 per year) by doing so.

What am I doing with the $1,440 I “saved?”

I’m investing every cent of that money!

best alternative investments yourself

Yourself


It is my opinion that the highest return on investment (ROI) in your life will be when you invest in yourself and your education. 

Your education is critical to help you get ahead. 

The day you stop learning is the day you start dying.

I know that sounds grim, but I think this statement holds true: What else would we do if we wouldn’t keep growing, learning, thriving?

We certainly wouldn’t become successful. 

By learning, I don’t necessarily mean learning within the classroom. 

In fact, I am a staunch believer that experience is the greatest educator. 

One of the best programs that could help you gain better insight into money and living a better life is my book, How to Get Rich from Nothing.

How to Get Rich from Nothing is packed full of financial strategies that will help you build wealth and live the life you want.

best alternative investments: business/side hustle

Business/Side Hustle


One of the best, “alternative investments” that you can make is by building your own business or side hustle

Building your own business is probably one of the most:

  • Stressful
  • Lucrative
  • Rewarding

…Things you can do with your life.

Take it from me, who has been building her personal finance blog over the last 12+ months, it’s not easy. At all. 

However, if you want to make money fast, then building your own business is likely the best shot you have to become a millionaire. 

In fact, 66% of millionaires are business owners.

66% of millionaires own their own business

The great news is that you don’t need to spend $1,000’s to become a business owner.

In fact, there are plenty of ways you can own a business, make a lot of money, and still spend very little on your business.

Below are some of my favorite examples of businesses you can build with massive growth potential:

Potential Income Type of Business

$0 - $50k+

Social Media Marketing

$0 - $100k+

Affiliate Marketing

$0 - $100k+

Consulting

$0 - $50k+

Selling Digital Products

$0 - $100k+

Web Design

There are so many cool businesses you can start on the side – or for a full-time project – and have a good shot at making a lot of money.

As always, however, there is a caveat:

  • It’s going to take time
  • It’s going to take energy
  • It’s going to take a lot of effort

Being a full-time blogger, I can tell you that I worked over 120+ hour weeks for probably 10 months straight and was paid $0.  

It’s very tough and often, being a full-time entrepreneur can be demotivating because you’re putting in 110% of your effort and you’re not being paid.

Alternative Investments Pros and Cons


As with all good things, there are pros and cons that you should consider before investing your hard-earned money. 

Let’s take a look at the pros and cons of alternative investments:

Pros Cons

Diversification

More difficult to value than publicly traded assets

Decreased overall volatility

Often illiquid

Potential for higher returns

Often a higher risk

Potential for passive income

Often more volatile

Think of alternative investments as a way to further diversify your portfolio.

Ultimately, the 3 main benefits I find of alternative investments include the following:

  • Diversification
  • Growth Potential
  • Hedge Against Inflation

However, alternative investments should never be your only investment.

FAQs

The stock market is not the only place you can invest your money. 

In fact, there are many different alternative investments to the stock market that you can choose from to invest and grow your money for the future.

List of alternative investments include:

  • Fine arts
  • Real estate
  • Precious metals
  • Cryptocurrency
  • Real Estate Crowdfunding

Before investing your money, make sure you do your own research and due diligence.

The short answer here is no; you do not need alternative investments to become a successful investor. 

Alternative investments are typically for those people who are:

  • OK to take risk
  • OK with volatility
  • OK to lose their money

As you can see, alternative investments have a significant downside, but they certainly have a large upside, meaning they can make you a lot of money. 

The reason why I like to consider alternative investments is because of the following factors:

  • Exposes me to potential gains
  • Adds diversification to my portfolio
  • Could make my portfolio more stable

Even though alternative investments are a great way to diversify your portfolio, I would suggest making sure you weigh the pros with the cons before you financially commit to alternative investments.

The four main types of investment alternatives may include:

  • Artwork
  • Real estate
  • Collectibles
  • Cryptocurrency

On the other hand, the most common types of investments include:

  • Bonds
  • Stocks
  • Mutual funds
  • Exchange traded funds (ETFs)

Keep in mind that it’s probably never a good idea to invest 100% of your net worth in alternative investments.

You’ll likely want to keep a portion of your money invested in more traditional investments (like stocks and/or bonds) in addition to investing in alternative investments.

If you have your money in traditional investments like the stock market, then alternative investments could be a good way to diversify your portfolio in an effort to mitigate risk. 

Alternative investments offer you (and your money) some advantages, including:

  • Potential growth
  • Decreased volatility
  • Portfolio diversification
  • Potential passive income

Of course, there are risks associated with alternative investments, and it would be crucial for you to do your research before financially committing.

Typically speaking, alternative investments are riskier than traditional investments.

Some reasons may include because alternative investments are:

  • More complex
  • Have higher fees
  • Are more difficult to understand 
  • Have potential for higher returns (meaning more risk)

If an investment product has the potential for a high return, then you almost always have the potential for high risk.

Of course, with alternative investments like:

  • Derivatives
  • Hedge funds
  • Private equity
  • Venture capital
  • Structured products

…You’ll very likely have high risk, high fees, and high volatility.

Typically speaking, these types of alternative investments are used by high net worth individuals (with $1 million or more in net worth), because they can afford to take a loss if only a portion of their net worth is invested in these alternative investments.