Most of us think stocks and property are the only investing choices. But let’s be honest today’s markets are packed with fresh ways to put your money to work.
If you want to step outside the Wall Street comfort zone, alternative assets can be pretty interesting. From earning yield on farmland to scooping up income from your favorite Drake track, alternative assets hit just about every corner of the economy.
Let’s run through eight types that deserve a closer look. We’ll speed through risks, fees, and a quick pros-cons cheat sheet, so you’ll know what matches your mood or money goals.
Why Should Anyone Bother With Alt Assets?
Before we dig into the cool stuff, here are three fast reasons people give alternatives a shot:
- Diversification. Spreading your money around more asset types can smooth out a rough stock market ride.
- Non-correlation. Some alternatives are not closely tied to stocks or bonds, so your portfolio might zig while the S&P500 zags.
- Unique returns. Private deals and nontraditional assets sometimes offer returns you just can’t find in public markets.
Let’s Get Into 8 Alt Assets
1 - Private Credit
Think of this as banks’ more flexible and cooler cousin. Private credit lenders give loans to businesses or special projects, but you, the investor, take the bank’s place.
Pros: Higher yields than CDs or public bond funds.
Cons: Illiquidity. Loans can be locked up for months to years, and risks spike if the borrower struggles.
Fees: Expect advisors or funds to charge a respectable slice for the trouble.
2 - Farmland
No matter the economy, people need to eat. Crowdfunded platforms and private funds let regular folks own slices of farmland.
Pros: Historically stable. Offers both rental income and land appreciation.
Cons: Hard to sell quickly. Droughts and crop diseases can spoil the party.
Liquidity: Low.
3 - Real Estate Debt
Instead of buying the building, you become part lender on the deal. You get paid first via interest while someone else sweats about finding new tenants.
Pros: Income arrives before equity investors get paid.
Cons: Real estate cycles can wipe out weak borrowers.
Due Diligence: Research the property type and city.
4 - Litigation Finance
Ever wish you could be the funder in a high-stakes lawsuit? Litigation finance funds bankroll legal cases in exchange for a chunk of any settlement.
Pros: Returns have little to do with stocks or bonds.
Cons: Cases can lose, dragging returns to zero.
5 - Music Royalties
Each time a song is streamed or played on the radio, someone gets paid. Music royalty platforms and funds let you grab a slice.
Pros: Streaming is a cash cow, and music tastes are global.
Cons: Past hits may fade. It takes homework to value song rights.
6 - Structured Notes
These are investment products baked with bonds and derivatives from big banks. Returns, payouts, and risks are all coded into the structure.
Pros: Custom payout features, including capital protection or boosted yields.
Cons: Sometimes overly complex. You need to read the fine print twice.
7 - Tokenized Treasuries
US Treasuries are the world’s safest asset, but tokenized versions trade on blockchain platforms 24/7.
Pros: Liquidity, transparency, and fractional ownership.
Cons: Young market. Tech or regulatory hiccups could cause headaches.
8 - Longevity-Linked Assets
A rising star, these investments are tied to demographic trends like longer lifespans. Examples include life settlements, where investors buy insurance policies and collect payouts when the insured passes away.
Firms such as Abacus are shaping the field of longevity-based investments and making it accessible for more portfolios.
Pros: Uncorrelated with stock performance, leverages demographic growth.
Cons: Often requires long holding periods and careful analysis.
Level Up Your Investing Game
Alternative assets are no longer just for super-rich insiders. They let you take charge, experiment with new income streams, and reduce your exposure to wild stock market swings.
The key is matching each asset’s unique quirks and risks to your own goals and timelines. Whether it’s music royalties, private credit, or longevity-based investments, there is real potential to build a portfolio that feels uniquely yours.
Stay curious, do your homework, and keep an open mind. This is how you discover fresh ways to grow wealth beyond what’s possible in public markets.
