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Alternative investments

Created:
23 May 2008
Written by:
Oliver Ralph

Investing stretches far beyond the dry world of shares and funds. It also encompasses a far wider range of assets, from property and bonds to more esoteric options such as wine, art and even toy cars. The only thing that unites them is a belief that they will rise in value over the medium to long term.

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Property

One of the most common types of alternative investment is property. As the old saying goes – invest in land, because they’re not making it any more. Those who have followed this route over the last ten years have done very well, and although the market has slowed over the last year or so, there are still good ways to make money from property, be it buy-to-let residential properties or commercial sites. The beauty of property investment is the relatively ease with which you can borrow money for the property in question. By funding the investment through a mortgage, you can boost the return you receive on the amount invested. You can also invest in property via the stock market.

View our full guide to property investment.

Bonds

Bonds are a popular type of investment, and should form at least a small part of most investment portfolios. They are effectively IOUs written by governments or companies. You loan your money to the government or company in question, and they pay you an annual interest payment and the initial sum back on a specified date.

Bonds are generally regarded as a safer form of investment than shares. That’s partly because, if a company were to hit the buffers, the bondholders get paid out before the shareholders. And because of that, the returns available for investing in bonds are not as high as they are for investing in shares.

View our comprehensive guide to investing in bonds.

Other alternatives

The range of alternative investments does not stop at property and bonds. Other potential homes for your money include stamps, art, antiques, books, fine wine and coins, to name but a few. This is where investing can really become a hobby, giving you personal pleasure as well as financial gain. It’s easy to get carried away with these types of investment by dipping into all of them. The sound advice is to pick just one area and get to know it really well. And when buying something, it’s often a good idea to give as much weight to your own tastes as to the investment potential.

View our comprehensive guide to other asset classes.

MORE INVESTMENT GUIDES:

Alternative investments (including property):

Funds

Retirement planning

Shares

Short-term Trading

Taxation

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