7 Alternatives to Investing in the Stock Market

alternatives to stock market investingAs a financial planner I work with a lot of clients and most of our investments are related to the stock market.

We invest in bonds, mutual funds, ETF’s, and the occasionally individual stocks that focus on dividend investing.

Every so often I’ll get some people that want to invest into “stock market alternatives“, meaning that they are a little bit fed up with the ups and downs of the market.

And who can blame them?

Every time the markets seems to want turn around, it jerks back leaving most of us scratching our heads and wondering when the madness is ever going to stop.

Because of schizophrenic behavior of the stock market many people ask me,

“Hey Jeff, what are some other alternatives to the market that we can invest into?”

Today I just want to share seven stock market alternatives that you can invest your money into.


1. Gold and Silver Coins.

You’ve heard it. Everybody wants to buy gold. Everybody wants to buy silver. The price of gold has escalated well over the last couple of years.

You have to realize that gold is a risky investment, and it fluctuates just like an individual stock – sometimes more! That being said, it is a stock market alternative, so if you have a fear of the stock market, then investing in gold coins might be a viable option for you.

2. Aged to Perfection

Another stock market alternative can be antiques. I am going to use my stepdad as a prime example. He’s invested into antique toys. These are the toys from the 30s, 40s and 50s. He invested into various paintings and other different types of art. He’s also was a huge Lionel train collector and has a whole spare bedroom filled with them.

I’ve seen the value of some of them and it blows me away on how much they are worth.

If you have a passion for things in the past, investing your money into such things as antiques might be a good alternative for you.

3. Keepin’ It Real

A third stock market alternative is one that I dabbled in, didn’t have much success.

Hopefully, you’ll do better!

It’s real estate.

If you missed it, I had an awesome interview of a successful real estate investor local to my area.

A buddy of mine named Eric who is now just 30 years of age and is killing it in real estate.

He’s done everything from lease to buy to foreclosures to wholesale. He’s done it all and this post covers a lot of that.

Obviously, real estate is a very awesome stock market alternative if you understand it. It’s something you don’t just dive into. Even though many people learn this way (me included) you’ll want to start on a smaller property if you do just go for it.

If your more conservative, you want to do your research and plenty of it.  You want to ask some people, ask some experts. Talk to some realtors and understand it before you start sinking real cash into it. . Just like my buddy Eric. He spent a lot of time and a lot of research and it has proven to be very valuable to him.

4. Peer Pressure is Good

A fourth stock market alternative that I’m partial to is peer-to-peer lending. If you’re not familiar with peer-to-peer lending, it’s relatively new, but has definitely gained a lot of traction in the last couple of years. There’s a few big players in the space, but the top two that you’ll want to check out are Lending Club and Prosper. I will tell you that I do have a Lending Club account and have done very well with it. I have not tested Prosper out yet. I have heard a lot of good things about it.

Real quick, what is peer-to-peer lending? It is exactly like what it sounds. You are lending money to a peer and then you’re getting paid the interest rate.   Essentially, you’ve just become the banker to the borrower.  It feels nice sitting on that side of the equation for a change.  :)

The thing I like most about peer-to-peer lending, especially through Lending Club is let’s say you invested a thousand dollars in Lending Club. Of those thousand dollars, only $25 would go to one individual borrower, so if that borrower defaults you don’t lose a whole lot of money. Think of it like buying stock in a mutual fund. If one of those stocks in that mutual fund goes belly up, you still have 99+ stocks in that mutual fund still making you money. Same thing with Lending Club and that’s why I like it.

It is diversification; you’re not putting all your loans into one basket.

I’ve done pretty well with it which you an see in my Lending Club Review blog post. I was averaging between 8½, almost 9½% return and as of today I’m still there, so definitely worth checking out as a stock market alternative.

Want to try out Peer to Peer Lending?   Find out more about Lending Club and Prosper.

5. Y-O-U

stock market alternativesThis one might be a bit of a surprise to you, but think about it. The one think that you can invest in is yourself. How do you do that?

You can invest in going back to school and getting an MBA, getting a PHD, maybe getting a degree that you never got, or getting another degree.

For me, what I’ve done is I invested into designation whether that be, for me the CFP® designation, or let’s say you want to be a CPA to be a Certified Public Accountant. Maybe there are certain designations in your field that could give you potential raises or open new opportunities for you at your job.

Other ways you can invest in yourself is by hiring a coach. Maybe you can do a personal development coach. I’m currently doing a coach for entrepreneurs, and I will tell you that the investment has been worth it tenfold.

I’ve only been doing it for just over a year now, but the processes that I go through, the mindset that I’m in has completely rocked my world.  Had I not invested that money into myself I never would have realized the untapped potential that lies within me. As you can tell, I’m very partial to coaching and I’m very partial to investing in yourself.

6. Equity Index Annuities

Yes, they have a tie to the market, but I thought they were worth including since you do have your principal protected.  If you’re young, they probably don’t make sense for you.  But many retirees love the principal protection plus the income benefit riders that they offer.

If you want to read more on them, this post that talks about the pros and cons of Equity Index Annuities is exactly what you need.

7. Invest Into a Business

Several years ago a close buddy of mine cashed out his Roth IRA to use towards his small business.  At the time I was a W-2 employee with my old brokerage firm and didn’t get the concept of owning your own business.   Truth be told, I thought he was a fool for cashing it in.  Sorry buddy.  :)

Now owning my own business, I realize that you don’t have to invest everything into the stock market.  You can invest into your business would could make you serious cash flow in the short term and potentially give you a big payday down the road in the event you want to sell.

I have a another friend who has successfully opened several locations of two franchises.   I think he’s up to 10 locations so far and is showing no sign of slowing down.

Both of these business owners don’t have much in the way of stock market investments but I’m fairly certain they are doing just fine.

Want more info on starting your own business?   Check out these posts on the 13 best small business ideas and 65 home based business ideas.

Investing into Stock Market Alternatives

These are just a few of the stock market alternatives that you have at your disposal.   Have you tried investing into other areas other than the stock market?   Share your story below!

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Comments | 9 Responses

  1. says

    #5 is definitely the most important on this list. Another alternative that you missed is websites. A portfolio of websites will bring much better returns than a stock portfolio. You can even outsource the ‘portfolio management’ to someone overseas for pennies on the dollar rather than an overpaid stock manager. :)

  2. says

    It’s nice to know that there are so many other investment options besides the stock market. Some of these (like real estate) do require a lot more work and know-how, but the good news is building that knowledge is something you have control over, as opposed to the stock market. Thanks for sharing!

  3. says

    #3 should be #1 in this economy. Real estate, in the US, is at the perfect price for investors.

    #1 is a place to park your money, but it’s not an investment. It’s speculation. Gold doesn’t pay a dividend nor interest nor rent.

    Antiques are increasingly risky. Easier to sell because of EBay, but overall prices have gone way down. Look at sports cards as a perfect example of a formerly flourishing market that has all but collapsed. Good luck getting 10 cents on the dollar on a collection.

    Lending Club is great. Distribute your loans to reduce the risk, and enjoy your above-average returns by cutting out the middle man (largely)!

    Rather than investing in yourself, I’d say the “Start a business” idea is likely to be much more profitable in the long run.

  4. says

    I always find stock market a difficult concept to study. I was really scared before to invest in stocks but now after reading your post I think I have understand a few things about this. Thanks a lot for explaining it to me.

  5. Janine says

    I’ve been looking at gold coins myself, but you’re right the price of gold has esculated over the last few years so realistically I’m looking at silver coins instead.

  6. says

    Investing in gold and silver is definitely a good alternative. While it is true that it involves quite a lot of risks, there are ways to avoid them by developing the right strategies.

    I like your list and I am really impress with your friend who succeeded in his real-estate business. We should really take some time doing research and not make hasty decisions.

  7. Keith says

    I noticed that lending club had a Roth IRA option. Do you think that is a good decision or do you stand by the list on your Roth IRA blog?

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