Five Proven Ways To Create Wealth Outside The Stock Market
If the instability of the stock market makes you too anxious to invest, that’s okay! There are numerous ways to invest your money and build wealth outside the stock market. Many know that variety is important when it comes to investing in the stock market. That same viewpoint applies to finding stock market substitutes that will help grow your net worth. Five Proven Ways To Create Wealth Outside The Stock Market
Some of these substitutes to investing in the stock market are nontraditional. Others, like real estate investing, are quite common. Whether or not the investment ideas below will work for you will depend on a few things:
- Your risk tolerance
- Your skill level
- The amount of money you have to invest
All of the prospects below are genuine ways to build wealth outside the stock market to expand your investments and make you less reliant on the market’s wild swings.
1. PEER-TO-PEER LENDING
Peer-to-peer (P2P) lending has grown up in popularity over the past few years. With P2P lending, you act as the bank by loaning money to other individuals that have need. In many cases, returns from P2P lending tend to be in the six to eight percent range.
As a borrower, you can apply for a personal loan for a variety of reasons. These could include moving expenses, hospital bills, or debt consolidation. Much like a traditional bank, the interest rate you get as a borrower depends on a variety of factors including your credit history.
According to an article in Forbes, “Compared to stock markets, P2P investments have less volatility and a low correlation.” However, do your research before choosing a P2P company as an investor. Pay close attention to the fees they charge you as well as their default rates. Doing this ensures that you’re making the wisest investment possible.
2. ANGEL INVESTING
Have you ever viewed “Shark Tank”? It’s one of my favorite shows. If you haven’t seen it, the show features several investors who hear pitches from entrepreneurs and decide whether or not to invest in their company.
Investing in companies is something available to anyone with funds to invest. You can invest in a local shop who wants to raise money to expand. You can help your neighbor get their food truck started.
The possibilities are endless and investing in startups is a strategy used by many millionaires as they seek to grow multiple streams of income.
Traditionally, angel investors give money to business owners in exchange for equity in the company. This is a way for you to diversify your investments without putting in the blood, sweat, and tears as a business owner.
3.PAY OFF DEBT
Repaying off debt isn’t that much of a stretch when it comes to trying to build wealth outside the stock market.
When you pay off high-interest debt, you build wealth by saving money on interest payments. So, the more you pay off, the stronger impact it has on improving your net worth.
It can be argued that paying off debt is the most important part of building wealth outside the stock market since carrying high-interest debt will prevent you from pursuing other wealth building opportunities.
4.PURCHASING REAL ESTATE
There are a number of ways to invest in real estate. For instance, you can purchase single family homes and rent them out. You can purchase apartment complexes or commercial property. You can even invest in real estate through crowdfunding sites.
Investing in real estate is one of the best ways to build wealth outside the stock market. Unfortunately, lack of funds can be a high barrier to entry for many individuals wanting to invest in real estate.
It’s important to note that real estate is a risky investment. However, there are ways to insulate yourself from potential market fluctuations, like paying for your rentals in cash.
WHY YOU WOULD BUILD WEALTH OUTSIDE THE STOCK MARKET
Diversification is key when it comes to investing. Not every investment opportunity will be profitable so adding diversity to your investments will protect you from wild swings or declines in your investments. Adding additional streams to wealth creation not only protects you but it allows you to further wealth creation.
Keep in mind the alternative investment ideas mentioned above aren’t necessarily better than the stock market. They’re just different. However, since people have different skills, risk tolerance levels, and available funds, it’s important to know the different ways of investing, and building wealth, outside of the stock market.