2756: [Part 2] 10 Ways To Invest Without The Stock Market by Kalen Bruce of Freedom Sprout on Real Estate

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[00:00:40] This is Optimal Finance Daily, Episode 2756. Ten Ways to Invest Without the Stock Market,

[00:00:46] Part 2 by Kaelin Bruce of freedomsprout.com. And I'm your host and personal finance enthusiast,

[00:00:53] Diana Merriam. This is the show where I read to you from the best personal finance blogs on the

[00:00:58] web, with the author's permission, of course. Now, today's post is a continuation from yesterday.

[00:01:03] So if you're new here, I'd recommend listening to yesterday's episode first. But if you're all

[00:01:08] caught up, let's hear part two and continue optimizing your life. Ten Ways to Invest

[00:01:17] Without the Stock Market, Part 2 by Kaelin Bruce of freedomsprout.com. If you don't recall from

[00:01:24] yesterday, number one on the list was hard assets. Now let's jump into the other nine ways to invest

[00:01:31] without the stock market. Number two, bonds. When you invest in bonds, you're investing in debt.

[00:01:38] That may not sound pretty, but it's a legitimate investment. In your money or your life,

[00:01:42] Robin and Dominguez go into depth about how investing in bonds helped them into early

[00:01:47] retirement. I'm not a big fan of buying bonds straight from the government or from companies

[00:01:52] themselves because it can be difficult and it's typically more of a manual process. But you're in

[00:01:57] luck because Vanguard and many other companies offer great bond funds. Here are some of my

[00:02:02] favorites. Vanguard Long Term Treasury Index Fund, Vanguard Intermediate Term Bond Index Fund,

[00:02:10] Vanguard High Yield Tax Exempt Fund. Out of those three, we are invested in the high yield tax

[00:02:17] exempt fund. And yes, if it's not obvious, I prefer Vanguard based on the low fees and excessive

[00:02:23] options. They are simply the best. Number three, inventions. Angel investing is the main way to find

[00:02:30] good invention ideas or just talk to people you know. You might only be a couple degrees of

[00:02:36] separation from an inventor who's looking for investors. When you hear of a good Kickstarter

[00:02:41] fund for an invention, contact the inventors and ask them if they have investment opportunities.

[00:02:47] It could be anything from a new device to a board game. I have a friend who invests solely in

[00:02:52] inventions and it's worked well for him. It takes some research and a lot of time, but it could pay

[00:02:57] dividends. Number four, real estate. Real estate will always be worth something. Everyone has to

[00:03:04] live somewhere. You can invest in rental properties that will produce an income or you can buy raw

[00:03:10] land in hopes that it will increase in value. Just keep an eye on your taxes and make sure to pay them.

[00:03:16] Commercial real estate is another option, but do your research first. If you're going to get into

[00:03:21] real estate, I suggest heading over to the best real estate blog on the internet, BiggerPockets.

[00:03:26] I promise you'll find the answers to all of your questions. Number five, small business. It's true

[00:03:33] that most small businesses end up failing. In fact, quote, 20% of small businesses fail in their

[00:03:40] first year, 30% of small businesses fail in their second year and 50% of small businesses fail after

[00:03:46] five years in business. Finally, 70% of small business owners fail in their 10th year of

[00:03:52] business, end quote. But if you really know of a groundbreaking local business, it's worth a shot.

[00:03:58] You know the local market better than outsiders. Use that to your advantage. If you think you've

[00:04:03] found the next apple, you could be in for some big returns. Of course, you could also lose

[00:04:08] everything you invest. Greater rewards come through greater risks. Number six, peer-to-peer lending.

[00:04:15] You can loan money to your brother-in-law and tell him to pay it back with interest. However,

[00:04:20] that may be the last time you ever see your money or your brother-in-law. Fortunately, there are ways

[00:04:24] to take advantage of peer-to-peer lending with less risk and without lending to people you know.

[00:04:30] Lending Club and Prosper are two of the most popular options, and they offer quite a bit

[00:04:35] of protection. Similar to the protection of a mutual fund, they will spread your investment

[00:04:40] across many different peers so you're not lending your money to one person. Number seven, collectibles.

[00:04:47] Sports cards, stamps, model cars, almost anything is collectible if you can find a buyer and if

[00:04:53] you can keep it in mint condition. This is more of a hobby than anything, so you want to be sure

[00:04:58] you're interested in whatever you're collecting. But remember, for collectibles without a buyer,

[00:05:02] it doesn't matter what it's worth. Use that to your benefit when you're buying collectibles,

[00:05:07] and you'll have an easier time selling them down the road. Often, due to how long it takes for some

[00:05:12] collectibles to become valuable, consider leaving this as a legacy to your children, possibly even

[00:05:18] for their children. But be careful not to leave a bunch of junk your children will have to store

[00:05:23] just because you saw it as a collectible. Number eight, antiques and art. Similar to other

[00:05:30] collectibles, antiques and art are only worth what someone will pay. However, there's a large market

[00:05:36] for both of these things. The most important thing here is to do your research. A well-researched buy

[00:05:42] can outperform the stock market any day. An uninformed buy can be the biggest burden on

[00:05:47] your portfolio. There's a lot of information out there to start investing in antiques and art.

[00:05:53] Number nine, wine. It's actually possible to make between 6 and 15% annually by investing in wine.

[00:06:01] You need to know a lot about wine, such as which wines are worth the most and how to store it

[00:06:06] properly and where to buy it, but this investment can definitely pay off. Of course, you need to

[00:06:11] make sure you're not going to be tempted to drink it all. Number 10, farming. This can go one of two

[00:06:17] ways. It can either be a lifestyle investment by buying and working a farm yourself, or it can be a

[00:06:23] capital-only investment by owning a farm that's run by someone else. You'll usually have to go in

[00:06:28] and get the process started yourself, but it can be a profitable investment once it's up and running.

[00:06:33] Remember, this is one of the alternate investment options Warren Buffett uses.

[00:06:38] It doesn't end there. These aren't your only options. Of course, you can always put your

[00:06:43] money in a high-yield savings account or invest in a CD, which is a certificate of deposit,

[00:06:49] but the rates of return are so low. It's not much of an investment. There's also

[00:06:55] forex and cryptocurrency, but both of those take a lot of research and too often end poorly,

[00:07:00] so be careful. That's why I didn't put them on the list, but they are options.

[00:07:05] If you're just looking to get out of the US stock market, there are plenty of stable foreign

[00:07:10] stock exchanges, but again, those exchanges are still affected heavily by the US stock market.

[00:07:16] It's great to invest outside the stock market for diversity's sake, but not for worry's sake.

[00:07:26] You just listened to part 2 of the post titled 10 ways to invest without the stock market

[00:07:31] by Kaylin Bruce of freedomsprout.com and I'll be right back with my commentary.

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[00:08:00] on-time ground shipments. It's time to turn shipping to your advantage. Learn how at USPS.com

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[00:09:27] Okay guys, I have to admit this was a tough list for me. If your reason for wanting to invest

[00:09:34] outside the stock market is due to the risk of losing money, most of these alternatives are even

[00:09:40] riskier in my opinion. Especially the idea of investing in collectibles. I would look at this

[00:09:45] as much more of a hobby versus a real way to build wealth. Consider all the people who thought

[00:09:50] Beanie Babies were a good investment. As I mentioned yesterday, I'll be adding bonds

[00:09:55] to my portfolio eventually for the purposes of smoothing out volatility while I'm drawing down

[00:10:00] from my portfolio. But the only other option I personally would consider from this list is real

[00:10:05] estate. The reason why I've been more cautious about investing in rental properties is that

[00:10:10] it requires a lot more work than investing in stocks and bonds. You don't need to worry about

[00:10:15] replacing the roof or problem tenants when you're investing in the market. There's also a much

[00:10:20] higher barrier to entry in owning real estate than investing in the stock market. And much higher

[00:10:25] costs of buying and selling that can eat into overall returns. That means for those that are

[00:10:30] just starting out, it generally makes more sense to start with basic stock market investing and plan

[00:10:36] to buy property later. I think the options on this list seem fun and interesting but would require

[00:10:42] discipline and time to do extensive research and due diligence. I'm not sure they're an adequate

[00:10:48] replacement to stock market investing for most of us. And that's another episode of Optimal Finance

[00:10:55] daily in the books. Thank you for your support and for listening every day. I'll be back with

[00:10:59] more for you tomorrow. So have a great rest of your day and I'll catch you tomorrow where optimal life

[00:11:04] awaits. Transcribed by https://otter.ai