Alternative investments are assets outside of traditional investments like stocks, bonds, and cash. They can offer unique opportunities for growth and diversification, but they often come with higher risks and less liquidity. Here’s a breakdown of what they are and how they work:

Types of Alternative Investments:
- Real Estate: Buying property or investing through real estate crowdfunding platforms (e.g., Fundrise).
- Private Equity: Investing in private companies, often through funds—usually for accredited investors.
- Commodities: Physical goods like gold, silver, or oil, which can hedge against inflation.
- Hedge Funds: Pooled funds using complex strategies to generate returns—typically for high-net-worth investors.
- Collectibles: Items like art, wine, or rare coins that may appreciate over time.
How They Work: Alternative investments often have less correlation with the stock market, meaning they can perform well even when stocks dip. For example, real estate might provide steady rental income, while gold can hold value during economic uncertainty.
Risks and Rewards: Alternatives can offer higher returns but often come with higher fees, less liquidity (harder to sell quickly), and more risk. They’re best used as a small part of a diversified portfolio.
Who Can Invest: Some alternatives, like real estate crowdfunding, are accessible with as little as $100, while others, like hedge funds, require significant wealth or accredited investor status.

Alternative investments can add variety to your portfolio, but they’re not for everyone—start small and do your research before diving in.

Real-Life Alternative Investing: From $100 to $1M

Let’s see how two people—one just starting out, another with a larger budget—used alternative investments to diversify their portfolios.

Tina’s Story ($100 to Start): Tina, a 31-year-old teacher earning $40,000 a year, wanted to diversify beyond her $500 in an S&P 500 ETF. She invested $100 in a real estate crowdfunding platform, earning 5% annual returns through rental income. She also bought $50 in silver coins as a hedge against inflation. After 2 years, her $150 in alternatives grew to $165, adding a small but steady boost to her portfolio.

Mark’s Story ($1M Net Worth): Mark, a 55-year-old business owner with a $1M net worth, had a $500,000 stock portfolio but wanted more diversification. He invested $50,000 in a real estate crowdfunding platform for rental properties (8% annual return) and $25,000 in a gold ETF to hedge against market volatility. Over 3 years, his $75,000 in alternatives grew to $90,000, providing stability when his stocks dipped during a market downturn.

Tina and Mark show that alternative investments can work at any level—it’s about finding options that fit your budget and goals!

Your Turn: Explore Alternative Investments in 5 Steps

Ready to explore alternative investments as a beginner? Here’s a simple 5-step plan to get started—I’ll keep it easy:

Assess Your Portfolio: Look at your current investments—alternatives should be a small part (5-10%) of your portfolio to start.
Research Options: Learn about accessible alternatives like real estate crowdfunding or commodities (e.g., gold ETFs).
Start Small: Invest a small amount—like $100—in a low-risk alternative, such as a real estate platform or a gold ETF.
Understand the Risks: Read up on fees, liquidity, and risks for your chosen investment—don’t invest what you can’t afford to lose.
Monitor Performance: Check your alternative investments quarterly to see how they’re performing compared to your other assets.

Let’s Test What You’ve Learned!

Here are a couple of quick questions to make sure you’re ready to explore alternative investments:

What’s an example of an alternative investment?
A) A savings account
B) Real estate crowdfunding
C) A checking account
What’s a good first step to exploring alternative investments?
A) Invest all your money in one alternative
B) Assess your portfolio and start small
C) Ignore the risks

Answers: 1) B, 2) B. Drop your answers in the comments—I’d love to hear how you did! And if you’ve got questions about alternative investments, let’s chat there too.

Ready to diversify your portfolio? I’ve put together a free Alternative Investments Starter Checklist to guide you through the process—it’s the same one I used to explore my own alternatives. Grab it below, and let’s add some variety to your investments!

Download My Free Investing Starter Checklist

Want to dive deeper? My Premium Investing Guide offers advanced strategies, research templates, and tips to help you navigate alternatives with confidence—no matter your experience level.

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