15 Best Alternative Investments To Place Your Bets On In 2024

Interested in the best alternative investments to diversify your portfolio? 

Alternative investing is a savvy way for regular and institutional investors to build wealth without relying on traditional assets like stocks and bonds.

When talking about alternative investments, most people think of real estate investment. But there are different alternative investments to expand your portfolio, including fine wine.

Let’s explore the 15 best alternative investments you can add to your portfolio, including fine wine, real estate, and gold. We’ll also discover how Vinovest can help diversify your investment strategies.

The 15 Best Alternative Investments For Your Portfolio

Here are 15 excellent alternative investments to help spice up your investment portfolio.

1. Fine Wine

As an alternative asset class, fine wine is a fantastic investment opportunity to help you earn a passive income.

The reason fine wine makes an excellent alternative investment is its scarce supply and high demand.

Only 1% of all wines produced in the world are investment-worthy, so it's incredibly difficult to source them and start investing. Also, supply decreases over time as bottles of wine are bought, consumed, or lost every year. 

Furthermore, the demand for exceptional wine is rising, and it has a very low demand elasticity (an indicator of change in demand due to change in price.)

This means that when fine wine prices increase, demand doesn’t change much.

But what will your returns look like? 

Fine wine has delivered steady, positive returns of 13.6% over the last 15 years. In fact, the market grew by 23% in 2021 alone!

Fine wine also has a low correlation with the global stock market. For example, in the last 15 years, the S&P 500 yielded 8.58% annualized returns compared to fine wine’s 13.6%.

So, how do you invest in wine?

You can begin investing in wine in several different ways:

• Buy and store bottles yourself.
• Bid at wine auctions.
• Purchase wines through brokers.
• Invest in wine stocks.

However, knowing which vintages are the best and tracking down a trustworthy broker can be time-consuming. Furthermore, finding a temperature-controlled storage facility can be costly.

Luckily, a trusted wine investment company like Vinovestis here to do the heavy lifting for you!

Partnering up with Vinovest is the easiest way to source, manage, and grow an incredible portfolio of investment-grade wines. Vinovest will procure and authenticate rare wines for you, store them in temperature-controlled bonded warehouses, and match you up with the highest price buyers when you decide to sell your bottles.

Vinovest’s master sommeliers use quantitative investment models to curate your portfolio, and its advanced AI-based algorithm takes thousands of wines into account.

2. Real Estate

Real estate investment also makes a great passive income. But, buying property isn’t cheap. 

Here are some ways to start your real estate investment journey.

• Buying commercial real estate that generates income
• Leasing out a property that you own
• Flipping real estate (developing and reselling real estate properties)
• Putting money into Real Estate Investment Trusts
• Real estate investment via a mutual fund
• Farmland real estate investing (only available to accredited investors)

3. Crowdfunding

Crowdfunding provides investors with a great investment opportunity by helping them fund businesses for a stake in the company, usually via an online alternative investment platform.

For example, a startup company not listed on a stock market can begin a crowdfunding campaign. As an individual investor, you can put money into the business for a share of equity in the company. 

You can also help crowdfund real estate assets, but this may only be available to accredited investors.

Crowdfunding requires a lot of effort on the investor's part to ensure that their money is going into the right places and will see positive returns in the future. That’s why private equity crowdfunding is also generally reserved for accredited investors.

4. Gold

Gold is an alternative investment that holds or increases its value over time. In fact, people have considered gold an alternative currency for centuries.

Gold has a low correlation with other traditional assets like stocks, so gold holds firm when other asset classes are affected by market turmoil.

You can begin investing in gold in several ways, like:

• Buying gold coins and bullion
• Investing in a gold-focused mutual fund or Exchange Traded Fund (gold ETFs)
• Buying stocks of gold mining companies

However, when buying gold coins or bullion, be aware that they do not pay any yields based on interest rates, so you won’t be earning a passive income.

5. Commodities

Commodities are tangible assets like goods that can be bought and sold. Things like oil, grain, and orange juice are all examples of commodities.

As an alternative asset class, commodities are an excellent alternative investment because they have a low correlation with the stock market. Furthermore, they are a traditional hedge against inflation.

As inflation raises the price of goods and services, the price of commodities increases as well. 

However, owning commodities does not guarantee a profit. They are susceptible to market volatility as well as technological advancement.

For example, if the supply of oranges increases, the price of orange juice will drop. And if technology makes juicing oranges more efficient, the price will also drop.

6. Peer-To-Peer Lending

As a peer-to-peer lender, you combine your cash with other investors to lend people money, kind of like a lending club. This lets you spread your investment across multiple loans with different risk profiles.

You can then make a passive income via monthly payments, including the interest rate you’re owed as an investor.

However, loans always come with the risk of borrowers defaulting as their private debt mounts.

7. Cryptocurrency

Cryptocurrency is a decentralized asset class protected by an alternative investment platform called the blockchain. 

Crypto acts as a good alternative investment because its value is expected to increase over time.

Crypto is still an emerging market but shows early signs of providing lucrative returns to regular and accredited investors alike. You can also invest in a crypto Exchange Traded Fund to bet on crypto without buying and selling on the crypto exchange.

A potential risk to investing in crypto as an alternative investment is market volatility. Crypto is also relatively illiquid, so turning your investment into cash flow takes time.  

8. Fine Art

You can start investing in fine art by buying a piece of artwork and waiting for its value to increase before selling it in the future.

Choosing a piece of art that is expected to increase in value is a skill set that not many people possess. To help you in this journey, you can consult an expert appraiser who will determine the value and authenticity of your artwork.

But, the fine art market is relatively illiquid, meaning it's difficult or time-consuming to transform your art into cash flow.

Also, these tangible assets must be stored and protected from humidity to ensure optimal quality in the long run.

If you want to begin investing in fine art without the hassle of procuring and storing the works yourself, there is a different, more traditional investment strategy. You can invest in blue-chip art on a stock market, giving you ownership rights to fine art pieces.

9. Venture Capital

Venture capital funds are an alternative investment option where you provide capital to startups in exchange for equity and even a share in management. 

Venture capital funds work similarly to equity crowdfunding, but accredited investors tend to stay invested in the companies for longer.

To invest in a venture capital fund, you can get help from a venture capitalist who will find deals for you. This gives you access to a portfolio of equity-generating investments without building one yourself.

10. Private Equity Funds

A private equity fund gives capital to companies that are not listed on a public stock market, but unlike venture capital funds, these are not startups.

When a private equity fund acquires a stake in a company, it is usually to restructure the firm and provide enough capital to accelerate growth. 

If the private equity fund liquidates its stake, it turns into a profit, and as an accredited investor, you get a share.

11. Hedge Funds

Hedge funds collect money from multiple accredited investors and provide capital into various investments to decrease the risk. 

They are alternative investment options that can fund anything from publicly traded securities to currencies and even stocks.

Generally, hedge funds have a fund manager who provides investment advice and makes an investment decision about the portfolio. So, if you invest in a hedge fund, you don’t always have a choice about where your money goes, just which hedge fund to choose.

12. Managed Futures

Managed futures act similarly to hedge funds - by pooling money from multiple investors and spreading it across different investments, in this case, future contracts. The main difference is that managed futures are more regulated.

As an alternative investment, managed futures help diversify your investment portfolio into the currency and commodity markets. Furthermore, your investments in managed futures often don’t follow market trends. 

This can be risky but provides solid returns when traditional investment choices face market turmoil.

13. Equipment Leasing

Equipment is one of the most costly expenses in a business, so it's often smarter for companies to rent it instead.

Many businesses choose to rent equipment through equipment leasing funds which engage in a limited-time partnership to loan equipment.

As an individual investor, you can let a fund manager make the investment decision about which equipment to acquire. They’ll then rent it out, and you’ll receive monthly payments until the lease ends or the fund sells off the equipment.

14. Tax Liens

A tax lien is the right to foreclose on a property or asset when the owner fails to pay their taxes. 

As an investor, you can choose to buy tax liens at auctions - paying the amount of taxes owed in return for the right to collect that money back in the future, plus interest.

When bidding at these auctions, it's important to note that the offer with the lowest interest rate wins the bid.

15. Start A Business

Investing in your own business is an alt investment with the potential to give you some of the highest returns of all your investment choices. However, it can also fail and cause severe losses and heartache, so there’s a risk.

One way to approach investing in your own business is to put some of your money into your business and invest the rest elsewhere.

Alternatively, you can create a part-time business. That way, you don’t have to give up the security of your regular job or drain your investments to fund a full-time business. You’ll also benefit from making extra money on the side.

Speaking to institutional investors or an accredited investor is an excellent way to get helpful investment advice and plan your investment strategy. 

Fine Wine: One Of The Best Alternative Investments

From fine wine to fine art, there are tons of different alternative investments out there to diversify your portfolio and help you earn a passive income. 

If you’re looking to embark on your fine wine investment journey today, sign up with Vinovest.

Vinovest offers the easiest way to source, manage, and grow a portfolio of investment-grade wines that historically outperform other investments.