10 Stock Market Alternatives to Invest Your Money In

by | Nov 2, 2023 | blog

Looking to invest but tired of dealing with the uncertainty of the stock market? There are a few alternative options you can look at. The stock market operates on a “high risk high reward” model that is viable for investors with big risk appetites. While the returns from investing in the stock market can be significant, so can its losses. Returns from the stock market are also unpredictable and depend on many interconnected factors that are not under the control of investors. 

So, what are the alternatives to investing in the stock market? The alternatives cut across several sectors, from finance and alternative real estate investing to high-yielding savings accounts. As the global financial landscape becomes more interconnected and unpredictable, many investors are looking beyond the traditional stock market to diversify their portfolios. For you to fully appreciate these alternatives, let’s take a look at some hurdles that investors face when putting their money in the stock exchange. Please consult a financial advisor about investing opportunities to ensure your decisions are in line with your individual needs and goals. 

Drawbacks of Investing in The Stock Market

stock exchange, stock market crash

1. Volatility and Potential Investment Loss

Stock prices can fluctuate dramatically over short periods. Factors such as corporate earnings reports, geopolitical events, economic indicators, and even public sentiment can considerably increase or decrease the value of a stock. Long-term investment strategies often aim to ride out these volatilities but there’s no guarantee of returns. You can experience significant losses if you are forced to sell during a downturn. Contrast such a scenario with a fund that aims to provide investors with an 8-10% annualized return, paid in monthly dividends. 

2. Emotional Decision Making

The stock market can test your emotional resilience. Watching the value of an investment plummet or surge can elicit strong emotional reactions, leading to decisions driven by fear or greed rather than rational analysis.

3. Complexity and the Need for Knowledge

The stock market is a complex entity with thousands of stocks spanning numerous sectors and industries. Successful stock investing requires a deep understanding of both individual companies and broader market trends. Additionally, there are various financial instruments and strategies (like options, short-selling, or leveraging) that you need to be knowledgeable about. Without adequate knowledge or guidance, you can easily make misinformed decisions, leading to potential financial setbacks.

4. Limited Influence Over Management Decisions

Shareholders own a portion of the company and can vote on certain issues at annual meetings. But, it’s the institutional investors and major stakeholders who make company decisions. This lack of influence means that you are at the mercy of management’s decisions which might not always align with your interests.

5. Time Investment and Constant Monitoring

Financial news, global events, industry changes, and shifts in technology can all impact stock prices. If you choose to actively manage your portfolio, you’ll be dedicating significant time to research, monitoring, and adjusting your investments. Even passive investors who adopt a long-term, buy-and-hold strategy, may find the need to occasionally re-evaluate their holdings in light of changing circumstances.

10 Alternative Investment Options to The Stock Market

Alternative Investment Options to The Stock Market

Diversifying your investment portfolio is a wise strategy to mitigate risks and optimize returns. While the stock market offers numerous opportunities, there are several other investment avenues to consider. Consult with a financial advisor prior to investing in these investment vehicles for more information. Here are 10 alternatives to stock market investments:

1. Alternative Real Estate Strategies

Real estate investing has two broad options, traditional and alternative investing. Traditional real estate investing is the conventional strategy of ownership and management of real estate assets for profit. The problem with traditional real estate investments is that they can be affected by the same factors that affect the stock market.

On the other hand, some alternative investments have a low correlation to conventional financial markets and therefore are a more stable and predictable investment strategy. For example, if you are looking for an investment that is secured by real estate but not investing in real estate directly, CWS Investments has a mortgage note fund that does just that and aims to deliver 8-10% annually, paid monthly as dividends. 

2. Precious Metals

Investing in physical gold, silver, and other precious metals can serve as a hedge against inflation and economic instability. They have intrinsic value and tend not to correlate directly with the stock market.

3. Buying Collectibles

Fine art, antiques, stamps, or vintage wines can be appreciated in value over time. However, the market for collectibles can be less liquid, and values can be more subjective.

4. Private Equity

This involves investing directly in private companies instead of publicly traded ones. Private equity investments can offer significant returns, but they’re also riskier and require a more hands-on approach.

5. Mutual Funds

These are pools of funds collected from many investors to invest in stocks, bonds, or other assets. While many mutual funds are stock-based, there are bond funds, money market funds, and other types that offer diversification.

6. Investing in Commodities

Investing in raw materials like oil, agricultural products, and metals can be a way to diversify. The commodity markets can be volatile, but they can also provide a hedge against certain economic events.

8. Real Estate Investment Trusts (REITs)

REITs allow individual investors to invest in large-scale, income-producing real estate. They offer a way to get into the real estate market without having to buy property directly.

9. Peer-to-Peer Lending

Prosper or LendingClub are platforms that allow individuals to lend money directly to others in exchange for potential interest income. This cuts out traditional financial intermediaries but also comes with its set of risks.

10. Fixed Deposits and Certificates of Deposit (CDs)

These are time deposits offered by banks with a fixed term and a fixed interest rate. They’re low-risk investments, but the returns are often modest, especially in low-interest-rate environments.

A Mortgage Note Fund is a Viable Investment Alternative to the Stock Market

Investing in a mortgage note fund can offer several advantages over investing in the stock exchange. Here are three reasons why you should consider investing in a mortgage note fund as a stock market alternative:

  1. Stability and Lower Volatility: Mortgage note funds exhibit lower volatility compared to the stock market. The performance of mortgage notes is tied to the underlying properties and borrowers’ ability to make payments. This connection to tangible assets tends to provide more stability because real estate markets typically experience slower price fluctuations than stock prices. During a market turbulence, mortgage note funds can offer a dependable income stream and capital preservation.
  2. Income Generation and Consistency: If you are an income-oriented investor, investing in a mortgage note fund can be advantageous as they can be a regular and potentially more reliable stream of cash flow. For example, CWS’ mortgage note investing fund has an aimed annual 8 – 10% rate of return that is distributed monthly through dividends.
  3. Portfolio Diversification: Because of its comparatively low correlation to conventional financial markets, adding a mortgage note investment to your portfolio can enhance your diversification efforts. When stocks underperform, mortgage note investments can act as a stabilizing force, helping to mitigate losses and maintain portfolio value.

Talk to A Member of the Team About Mortgage Note Investing Today

CWS Investments is a reliable partner in the field of alternative real estate ventures. With a team of experienced professionals overseeing major US markets, you can invest in our mortgage note fund from anywhere in the country. Interested in exploring an alternative investment to the stock market? Engage with CWS Investments team today.

5 Burning Investor Questions about Stock Market Investment Alternatives

1. Is there an alternative to the stock market?

There are several alternatives to investing in the stock market. The world of alternative investments offers a diverse range of options from private equity to rental property, providing multiple avenues for institutional and accredited investors to diversify their portfolios.

2. What is safer than the stock market?

Safety is often subjective and dependent on market conditions, but many consider bonds, real estate, and certain exchange-traded funds to be safer than individual stocks. Consult with a financial advisor to determine your risk tolerance and determine which investment vehicle may fit your needs.

3. Is crypto an alternative investment?

Yes, cryptocurrency is considered an alternative investment. While it offers significant potential for high returns, it’s also associated with high volatility and risk. It’s a relatively new asset class, and its long-term viability is still a topic of debate among experts. Speak with a financial advisor prior to investing. 

4. Where do millionaires keep their money?

While millionaires diversify their assets, they often allocate a portion to traditional investments like stocks and bonds. However, they also explore alternative investments such as private equity, venture capital, and real estate. Additionally, many millionaires reinvest in their own businesses or seek out new investment opportunities in emerging sectors.

5. What are alternatives to trading?

Four notable alternative investments include:

  • Real Estate: Investing in niche opportunities like investing in mortgage note funds have the potential for lucrative returns.
  • Real estate and earning returns through rental income and potential property appreciation.
  • Venture Capital: Investing in early-stage companies with high growth potential.

Peer-to-peer Lending: Directly lending to individuals or small businesses online, often facilitated by a dedicated platform.