There are a number of different opportunities for investors seeking to put there money somewhere other than the stock market. As we finish 2018 and enter 2019, it is becoming more and more obvious that the bull market we have enjoyed for the past few years, is finally coming to a close.
As people seek to avoid potential bear markets and the volatile stock market, it’s no surprise that many investors are choosing some of the following places to turn a profit.
Peer-to-peer lending or P2P services are typically run through a website organisation. The way peer-to-peer lending or crowd-lending as it’s sometimes known, allows investors to put money into a company or a borrower hunting for cheaper loan rates. This is essentially cutting out the middle man, or banks, to provide a better deal for both parties.
The benefit of investing through these websites is that because of the demand for loans, many smaller companies are willing to pay higher rates than normal. Huddle Capital is one particular website that is currently offering between interest returns of 12% to 16% on their peer to peer business lending.
The higher interest rates are higher than those of a saving account for investors but, lower than interest rates would normally be for borrowers means everybody wins. Not only that, but it directly helps the UK economy by providing support to small businesses.
There is a catch though, there is some element of risk. While the process might feel a lot like saving, you shouldn’t be lulled into a false sense of security, you can lose your investment.
While it isn’t common for a borrower to default on their loans, just not pay you, it can happen. Defaulting isn’t something that happens often because there a number of safety nets in place to prevent this from happening, it all depends on the third-party go between that you are investing through.
Some sites like Zopa will manage your investments by splitting them into smaller amounts and investing these amounts as multiple-loans. This helps to spread the risk if one or two of the loans fail or go bad. Furthermore, a number of these companies will have a cash reserve to help compensate investors if needed.
Index Tracker Funds
Okay, so this one is technically investing in the stock market, however, I made the decision to include it due to Index Tracker Funds being very different from traditional stock market investing. While an active approach typically relies on you or a fund manager to be regularly acting on the markets, Index Tracking funds have what is known as a passive investment strategy. You can sit back relax and watch your money go
Index Trackers Funds have steadily been growing in popularity in recent years due to their seeming simplicity especially when you compare them with the standard stock market investment opportunities available.
Instead of having to keep tabs on multiple investments spread across a large number of different companies, an Index Tracker Fund will automatically invest all of your funds into a single index, such as the FTSE100.
This means that as your returns on investment will be completely dependent on the strength of the FTSE 100. If the forex index gains 5%, so will your interest rates. If the stock markets fall, so will your tracker investment.
The downside is your diversification isn’t as strong as you might think, the FTSE 100 can be dominated by significantly larger companies. Your investments are not spread evenly across each member of the FTSE 100, instead, it’s worked out via a percentage depending on a company’s size. Therefore if some of the larger FTSE 100 companies are struggling or dropping into a bear market, the rest of the FTSE 100 companies in your portfolio will feel the effects.
Outside of larger indexes, the risk is certainly not reduced by investing in something like the Japanese smaller companies’ sector. These indexes, and even in some cases larger ones like the FTSE 100, can take significant damage if a particular sector in the market fails. For example, if tech companies were to really struggle, a tracker fund following an index with a number of tech companies would be significantly affected.
Gold and Precious Metals
Gold has almost always held value. While there are a number of precious metals on the market seemingly worth investing in, none of them even come close to having the same type as history as gold.
For years the global economy operated and pegged the value of currency on the amount of gold a country had. If your country had lots of gold, you had a strong currency. If you didn’t, your currency was weak. While this changed post World War 1 there are still many individuals still out there, known as gold bugs, who continue to cling to the metals past predicting that it will once again be the primary resource on which we place one of the highest values.
In reality, this isn’t particularly farfetched. Gold is a reasonably safe investment, while it’s returns might not be on the same level as stock market investments, it does hold a number of key advantages that can be valuable assets to those who invest in it.
There is a limited amount of gold available. Its rarity is what helps to give it its value and as the population continues to rise, products or resources that are limited, will theoretically also increase in value.
It is also an internationally recognised symbol of value. If you were to find yourself in the middle of an economic crisis that was solely isolated to your country and consisting of high inflation rates, you can rest assured any investments in gold would still be recognised by other nations across the world. If the apocalypse ever happens, gold is probably one of the strongest negotiating tools at your disposal, other than perhaps Bear Grylls survival skills or perhaps, a tank.
If you’re not a big fan of doomsday predictions but still think that inflation rates might be creeping up, buying some solid gold might be a good way of protecting your savings. However, if you’re looking for some high returns mixed with a bit of risk, investing in gold and precious metals probably isn’t for you.
Okay, so this is quiet an obvious one, but it couldn’t be ignored. Buy-to-let investments are normally a good investment and if you approach it in the right way, you can get some strong yields and turn a tidy annual profit.
Even if you remember the housing crisis of 2008 and are a little nervous about property investment, there are still plenty of options out there for you.
There are a number of different ways you can invest in real estate without the same level of risk as personally handling a property portfolio. NEPI, a north east property investment company, offers the chance for investors to join the buy-to-let market with fixed rental prices and strong yields. While fixed rent prices mean that the amount of profit you can make is capped, something that puts off a-lot of professional investors, it does practically guarantee your money is safe.
Obviously, if the housing market was to drop, the property wouldn’t be worth as much. There are also potential issues with tenants or just general house upkeeping. However, the housing market has proved that property will always retain its actual value, as opposed to the current selling value. For example, your house might be valued at £100,000 in 2018 but this value is based upon how much people are buying similar properties for and its actual value is just £85,000. If the housing market were to drop and your house was now valued £80,000, this is just temporary, as the true value of the property is always increasing, it’s just not always reflected by the prices of homes on the market. Your property will eventually reach and exceed the original value of £100, 000, it just might take some time. As a result, while this is a very safe investment, it is certainly a long-term investment and not something you can pull out of quickly.
Alternatively, take a look at investing in property through mini-bonds or by using a crowd funding loan. Both of these services are offered by a select few companies that offer some reasonable returns and avoid the stock market.