It’s easy to start socking away cash under your mattress or in a savings account and completely forget about investing it. But if you are guilty of this, you need to change the ways you invest your money immediately!
Neither of these options are going to surpass, or even keep up with, the rate of inflation. This means you are actually losing money by storing cash in your house or keeping all of your money in a traditional savings account.
Of course you need to keep some of your money available as liquid funds in case you need to access your money quickly, and cash or savings accounts are a good way to do this. But the rest of your money should be invested so you can earn more on the money you already have.
Most investment guides will tell you to invest in CDs, the stock market, a high-yield savings account, or a traditional retirement account like a 401(k) or IRA. But there are other options to invest your money. Here are four non-traditional ways to invest your money.
In recent years, peer-to-peer lending (P2P) has become a popular, but still non-traditional, way to invest your money.
P2P lending is a way for borrowers and lenders to bypass and avoid using regular banks to make loans. As a lender in P2P lending, you’ll earn a predictable rate of interest on the money you use to fund someone’s personal loan. You also have the option of which loans to participate in, so you have control over how much risk you are willing to take.
But don’t be fooled — there is still some risk of default and if that happens, you will likely lose money. Loans in P2P lending situations are not FDIC insured.
Some people simply choose to start funding a self-directed IRA to invest more of their money. A self-directed IRA is very similar to a regular IRA or a 401(k) that you might be a part of through your employer, but with more personal involvement in the decision-making process.
A self-directed IRA can be funded up to $5,000/year and is a tax deductible way to invest your money.
Some people like to invest in something tangible, therefore they decide to invest in collectibles. Collectibles can vary widely and include things like jewelry, precious metals, art, antiques, and possibly even firearms. The trick to investing in collectibles successfully is to pick something you are knowledgeable about so you don’t overpay for the items you buy.
You also need to consider the time and work involved with finding the right buyer to buy these collectibles from you if you ever need to access that money in the future. Plus, the value of collectible items can vary widely over a short period of time.
Similarly to investing in collectibles, some people choose to invest in real estate because they like to use their money to own something they can see. The biggest benefit of investing in real estate instead of collectibles is that real estate values tend to be on an upward trend over time and their prices are usually less volatile.
Depending on what type of real estate investing you do, you could simply choose to buy and own your own home without owing money on it to anyone. Or you could decide to invest in rental property or farm ground, both of which can generate an income stream from the moment you sign the deed and invest your money.
No matter how you decide to invest your money, from the traditional to the unique, you need to make sure your option is well-researched so you can make a wise decision.