The stock market has been on a wild ride over the past couple of years, especially with the pandemic causing a significant market crash early on, followed by a rapid recovery and all-time highs.
However, the market is now getting expensive, and many experts predict it is due for a correction. As an investor, what should you do? Instead of holding cash, you can consider investing in other assets in order to get higher returns.
In this article, we will discuss what these assets are and why they might be a good choice for you.
(P2P) Peer-to-Peer Lending
Peer-to-peer lending, also known as P2P, is an alternative investment option that allows individuals to lend money directly to borrowers, thus cutting out banks and other intermediaries. Investors can earn higher returns than traditional banks, and borrowers can receive lower interest rates than they would through banks and other lending institutions.
Websites like Lending Club and Prosper provide a platform for P2P lending. While it can come with risks, it can also provide a steady stream of income.
Real Estate
Historically, real estate has been a solid investment. It typically appreciates over time and can provide a steady stream of rental income as well. While real estate investing does require a higher initial investment than other options, such as stocks, it can provide a more predictable return.
Plus, low interest rates make it easier to obtain a mortgage and reduce your overall costs. Consider investing in a rental property or a real estate investment trust (REIT) for a more hands-off approach.
Investing in Commodities
Next up: Commodities refer to physical goods such as gold, silver, oil, and agricultural products. These investments often serve as a hedge against inflation, as the prices of these goods tend to rise when the value of the dollar decreases.
Essentially, you can invest in commodities through exchange-traded funds (ETFs) or by purchasing the physical product itself. But keep in mind that commodities can also be volatile. So, it should only represent a small portion of your overall portfolio.
Investing in Cryptocurrency
Cryptocurrency has been around for over a decade but it has only recently garnered mainstream attention. While investing in a digital currency like Bitcoin can come with risk, it can also provide a high reward.
For instance, Bitcoin’s value has skyrocketed in recent years and is predicted to continue to climb, with more companies and retailers accepting it as a form of payment. However, consider doing thorough research before investing in cryptocurrency. And only allocate a small portion of your portfolio.
Dividend-Paying Stocks
While the stock market may be getting expensive, some companies still offer dividends – a share of the profits distributed to shareholders. Dividends can provide a steady stream of income and are often paid quarterly.
So, look for companies with a long history of consistent dividend payments and solid financials for a more predictable return.