Introduction
If you have a look at it, not every investor is enthused with stock market trading and tackles the market volatility that is associated with it while you keep dabbling with shares and stocks.
Retail investors might as well look for non-equity investment options that are relatively more stable investment portfolios and less likely to be impacted by volatile market conditions. On this parlance, let us discover types of Investments Not Tied To The Stock Market.Helping you understand further:
What Are Investments That Are Not Tied To The Stock Market- Meaning and Conceptualization Explained
Investments not tied to stock refer to non-equity investments. These are stable portfolios that face less market volatility. Hence, no-stock investment options are mostly preferred by the traditional segment of investors comprising retirees, pensioners, or senior citizens who want decent returns on their investment portfolios. At the same time, they also want their capital to be reimbursed once the investment tenure is up and the portfolios are ready for redemption.
To get yourself started with no stock investment portfolios, you must visit an investment firm or a banking office. You can discuss your financial obligations with a financial advisor or with an investment planner. You can discuss the amount of capital that you are ready to invest in the portfolio vis-a-vis the returns you expect from the same. Your risk tolerance ratios would then be assessed before you can finally get started.
What are the different types of no-stock investment portfolios that are available for investors?
These are the different types of no-stock investments that are available for retail investors. Let us have a run-down on the same:
Real Estate
Real Estate produces tangible or real-time assets comprising properties, residential spaces, and commercial offices. You can purchase properties or invest in plots. This way, you receive an ongoing income in the form of rental receipts that you can collect from your tenants. This is a passive source of income on your investment portfolio, or what you call the returns on investment.
Plus, you can sell your properties once the value of your buildings appreciates. Therefore, this is a no-stock investment portfolio you can consider investing your money in.
Government or Corporate Bonds
You can have hands-on to buying govt or corporate bonds that provide a 100 percent guarantee of returning your capital sum at the end of the term period or maturity period, these bonds are backed by.
When you purchase bonds from government entities or private firms, you also get periodic interest payouts that help you earn passive sources of income. Therefore, this is a no-stock investment option that highly appeals to risk-averse investors like retirees, pensioners, or senior citizens who do not want to lose their capital vault owing to the market volatility.
In a nutshell, investments comprising government and corporate bonds are relatively low-risk portfolios that garner a steady source of income for the portfolios. However, bonds can be impacted through interest rate changes and provide modest rates of return as compared to stocks.
Certificates of Deposits or CDs
Certificates of Deposits or CDs refer to time-horizon deposits that are offered by banking corporations to retail investors. These come to you with a fixed interest rate and maturity period. CDs are preferred investments by traditional and retail investors as these are FDIC-insured and therefore considered safe investment portfolios across the US. However, you may incur a penalty fee if you want to redeem your funds prior to the maturity date. These are capital safe, no stock investment portfolios that provide modest rates of return across your investment portfolios.
Gold and Precious Metals
You can invest your money by buying gold and silver coins. Or, you could try dabbling with digitally owning these assets via your investment portfolios. This can be done even without owning the physical assets. You can sell your gold or silver coins as the metals appreciate well. This way, you can get a sizeable return on investment via your precious metals.
The investment portfolios can also appreciate when the market movements are on the rise with respect to gold, silver, or other precious metals. You get attractive returns on investment and regain your capital sum owing to the very high liquidity the metals or portfolios have with respect to buying or selling them inside the market.
In a nutshell, this is an investment portfolio not tied to the equity or stock exchange markets.
Annuities/ Insurance products
Annuities refer to insurance products that infuse investment benefits into the portfolios. In lieu of premium subscriptions over lump-sum values or across periodic payments from your end, you can have your insurance contracts activated.
You can avail yourself of life insurance and medical benefits for you and your family members. Plus, you can benefit from tax-deferred income growth and receive steady payouts in the form of interest earnings or coupon payments. The principal amount is invested via indexed funds and not into regular stocks or equities.
Therefore, insurance products or annuities are a no-stock investment option that is worth considering.
Having your money inside your savings account
Having your money secured inside your bank account or savings account can attract a rate of interest that the bank offers you from time to time. This is an FDIC-insured and safe account. However, the rate of returns can be very modest in this non-stock account, and this way, the funds can deplete owing to a growing degree of inflation.
Peer-to-peer lending
You can lend money to individuals and small-scale business entities using online platforms. You earn better rates of return on bank deposits. However, the money you give as a peer-to-peer lending scale is not insured. Here, if individuals or entities default on repayment, then this is a risk you must take under your own pedestal alone.
Private Equity
You can lend your money to business entities that are not listed on the stock exchange. These are private firms or start-ups where you can lend money to. You can earn lucrative returns on your capital investments on account of profits arising from business buyouts and overall growth and turnover of enterprises. However, your investments are not insured, and default risks are on the cards.
Venture Capital
Venture capitalists lend to early-stage start-ups that provide buy-back shares in lieu of the capital amount investors lend to them on the whole. The shares grow only when the entities grow, and this is an investment portfolio that is not linked to stock exchange markets or the volatility factors you find inside bearish or bullish markets. You can also be a limited partner by backing the entity financially and providing your inputs to ace managerial expertise of these LLP firms. You can steer forward mergers or acquisitions of these enterprises as they expand their horizons or increase their scale of their businesses.
Commodities that are non-equity based
You can invest in commodities like wheat, oil, agro products, and precious metals without having physical ownership of the same. You get returns based on how the commodity markets revolve, and the investment portfolios are non-equity based and can provide you with more diversified investment portfolios.
The Bottom Line
Nonstock investment portfolios require a certain degree of understanding and expertise, as you may have to deep dive into each one of them. You can consult an investment advisor who briefs you about your risk tolerance and analyzes your financial objectives before drafting investment plans for you. What are your thoughts on this? Do mention it in the comments below!
Frequently Asked Questions or FAQs
What is an alternative investment option to stocks or mutual funds?
Answer: You can choose real estate, etfs, annuities, insurance, and many domains that do not revolve around stocks or equities. Hedging of precious metals can also allow their prices to appreciate well before you sell them in the future.
Why are equity-based asset classes highly volatile?
Answer: Investments like stocks or shares highly rely upon rising markets, also known as bull markets, or falling trends known as bearish markets. Therefore, you must closely monitor price movement swings when you are relatively new to stocks or equity.
Can currency markets be considered non-stock investments?
Yes, you have crypto coins and Bitcoin mining that is newly added to investment portfolios. As a buyer, you can buy these currencies and hedge them against debt equity ratios to earn lucrative returns on your investment portfolios. However, you must be wary about companies turning scam to lure consumers with heavy returns on their capital investments. You must correlate your financial goals, like Retirement plans to retire early, or other holistic investment solutions that can keep you way ahead of your financial curve.
