Forget Wall Street: Unconventional Investment Ideas
People who want to grow their wealth usually look to stocks, bonds, and mutual funds. These investment vehicles often lead to decent returns, as long as the investor is able to wait out recessions and stock market lulls. But, unless you get lucky and find the next Microsoft, stocks aren’t going to make you a Lexus-driving country club member. Still, stocks are a solid, albeit boring, way to grow your money.
Some people get in to the research that goes along with stock and bond investment and love to learn about the companies and industries that they are interested in investing in. Others find the act of learning about the market tedious, confusing and boring. Some people fight the boredom and escape from the investing herd mentality by seeking out unconventional investments. Here are some options to help you think outside of the Wall Street box.
Even someone who doesn’t know the difference between pinot and port might find wine to be an interesting investment alternative. Fine wines grow in value as they age. They need to be stored properly so that this aging process actually adds to the flavor (and value) of the vintage. This means having a wine storage device in your basement (that is, unless you have an estate with a wine cellar, but why would you need to worry about investing if you already had an estate?).
Novice wine investors have to learn the market, which will entail studying which estates produce the most valuable bottles and following the annual tastings of each vintage so that you can decide when the optimal time to sell is. The most valuable bottles are sold at auction, with places like New York, London and Hong Kong having regular events. Single malt scotches are also a good investment vehicle. Though having a viable storage place is a must, single malts are not quite as finicky as wines when it comes to temperature and environment.
Why is whiskey an especially good investment? Interest is growing faster than supply for both fine wines and whiskeys. Newly wealthy people in emerging markets like China, India, and Brazil are beginning to discover high-end alcohol and are willing to spend for it. Cigars are a less understood market. Fine cigars are sold by the box though specialty dealers and auction houses. Again, knowing which brands are valuable and then buying and properly storing them (in a humidor) is imperative to success. One advantage of investing in these items is that if you don’t achieve a profit, you can drink or smoke your collection and still get some joy out of it.
Gold, silver, platinum, and precious stones have been the basis for money for centuries. To this day, if you want to show wealth, you wear diamonds and gold jewelry (among other things). I remember gold sitting at $260 per ounce about a decade or so ago. Now it has skyrocketed well past a $1000 and is approaching $2,000. It doesn’t take a mathematically-inclined person to figure out that those who had timed it right would be making much, much more of a return on their gold coins than someone who had invested in the stock market (except for the few people who happened upon a real Wall Street winner). The chance for awesome profits is a definite plus for precious metals and gems. One negative for gold and diamonds, like the alcohol and tobacco mentioned above, is storage. Precious metals and stones are a favorite target for robbers (especially if you have been showing them around), so safety is an issue. A bank vault or home vault will be sufficient, most likely. Yet another minus is that precious metal markets fluctuate, so you will have to know when to sell and when to hang on. This means that gold is not necessarily the best buy-and-hold-forever option.
The art market and collectable markets are probably the most difficult to understand for novices, but they can also be the most fun to invest in (and they can also be modestly profitable once you pass the learning curve). Classic paintings aren’t the only thing worth having in your collection. You can find art that is interesting to you or even speculate on up-and-coming artists with the hope that they will make a name for themselves and increaser the value of your “early works.” As with the other investments on this list, storage is an issue with art and also with collectables. Insuring artworks and protecting them from molds and water damage is important if you want to maintain the value.
These investment vehicles are merely suggestions; an invitation to think outside of the box and seek out investments that you can get excited about and enjoy learning about. Whatever niche you choose, it will most likely have the same kind of learning curve as the stock market, but hopefully climbing the curve will be more fun.
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About Josh Lew Josh Lew lives in the Midwestern US when he is not traveling. He is a columnist for Gadling and has contributed to Hackwriters and Skive Magazine.