The Top 10 Alternative Investment Platforms to Diversify Your Portfolio

Investors are increasingly adopting alternative investments, diverging from traditional ones like stocks and bonds. This trend is growing daily. Alternative investments encompass various asset classes such as private equity, real estate, and commodities. This blog post highlights the top 10 alternative investment platforms to help you build a diverse portfolio, reducing risk and potentially increasing returns.

1. Fundrise

At a Glance: Fundrise is a pioneer in real estate crowdfunding, offering access to premium real estate investments starting with as little as $500. The platform deals with both commercial and residential properties through diversified eREITs (electronic Real Estate Investment Trusts), allowing for stable income and long-term growth.

Benefits:

• Low minimum investment
• Quarterly dividends
• Diverse real estate portfolio

Drawbacks:

• Limited liquidity
• Market-dependent returns

2. Wealthfront

In Summary: Wealthfront is a leading robo-advisor providing automated investment portfolios. It offers access to asset classes such as real estate, natural resources, and emerging markets through Exchange-Traded Funds (ETFs). Wealthfront’s algorithms tailor your portfolio to match your risk tolerance and investment goals.

Benefits:

• Low fees
• Automated rebalancing
• Tax-loss harvesting

Drawbacks:

• Limited customization
• No direct ownership of stocks or bonds

3. YieldStreet

Summary: YieldStreet provides access to alternative investments in private markets, including real estate, legal finance, art, and marine finance. The platform democratizes investment opportunities, aiding income-seeking investors in diversifying their portfolios.

Benefits:

• High-yield opportunities
• Diverse asset classes
• Low minimum investments

Drawbacks:

• Higher risk
• Limited liquidity

4. PeerStreet

Overview: PeerStreet is a real estate debt investment platform focusing on short-term, high-yield debt. It offers a unique asset class with significantly lower risk compared to traditional real estate investments.

Benefits:

• High returns on short-term investments
• Diverse real estate loans
• Passive income through interest payments

Drawbacks:

• Illiquid investments
• Market risks

5. EquityMultiple

Summary: EquityMultiple specializes in commercial real estate investments, providing access to institutional-grade properties. It allows investors to build diversified portfolios with equity, preferred equity, and senior debt investments.

Benefits:

• Professional asset management
• Diverse investment options
• Potential for high returns

Drawbacks:

• High minimum investment
• Long investment horizons

6. AngelList

Overview: AngelList connects startups with early-stage investors, offering potentially high returns if the companies succeed. Investors can also participate in syndicates, where professional investors lead investment rounds.

Benefits:

• High potential returns
• Early-stage investment opportunities
• Syndicate participation

Drawbacks:

• High risk
• Long-term commitment

7. Masterworks

Conclusion: Masterworks enables investment in master paintings, securitizing the art market. This platform, previously accessible only to wealthy collectors, now offers investments in works by artists like Picasso, Warhol, and Basquiat.

Benefits:

• Unique asset class
• Potential for significant appreciation
• Inflation hedge

Drawbacks:

• Illiquidity
• High fees

8. CrowdStreet

In a Nutshell: CrowdStreet focuses on commercial real estate investments, offering accredited investors opportunities in individual deals, funds, and custom portfolios. It targets investors seeking significant growth potential in commercial real estate.

Benefits:

• Access to institutional-grade real estate
• Numerous investment opportunities
• Detailed deal information

Drawbacks:

• High minimum investments
• Only available to accredited investors

9. RealtyMogul

Summary: RealtyMogul is a real estate crowdfunding platform providing equity REITs and individual property investments. It offers access to U.S. commercial properties, aiding portfolio diversification with a mix of equity and debt investments.

Benefits:

• Variety of investment options
• Monthly distributions
• Availability of investment homes (Qualified Real Estate Assistance Investment)

Drawbacks:

• High minimum investments
• Illiquidity

10. LendingClub

Summary: LendingClub offers peer-to-peer lending, connecting investors with borrowers. Investors can earn monthly interest payments by investing in personal loans, catering to a wide risk spectrum.

Benefits:

• Stable income through loan repayments
• Diverse borrower profiles
• Automated investment options

Drawbacks:

• Borrower default risk
• Illiquid investments

Additional Strategies for Successful Alternative Investing

To further enhance your success in alternative investing, consider implementing these additional strategies:

1. Set Clear Investment Goals

Before diving into alternative investments, clearly define your financial goals. Are you looking for short-term gains, long-term growth, or steady income? Your objectives will guide your choice of platforms and asset classes.

2. Understand the Risks

Each alternative investment carries its own set of risks. For instance, art investments can be highly illiquid, while peer-to-peer lending carries borrower default risk. Conduct thorough research and understand the specific risks associated with each type of investment.

3. Start Small

If you’re new to alternative investments, consider starting with smaller amounts. This approach allows you to gain experience and understand how the platforms work without risking a significant portion of your capital.

4. Seek Professional Advice

Consulting with a financial advisor can provide valuable insights and help you make informed decisions. Advisors can offer guidance on asset allocation, risk management, and optimal investment strategies tailored to your goals.

5. Leverage Technology

Many alternative investment platforms offer sophisticated tools and resources to help investors. Utilize these tools for portfolio management, performance tracking, and market analysis. Automation features, like those offered by robo-advisors, can also help streamline your investment process.

6. Stay Informed

Keep abreast of market trends, economic indicators, and news related to alternative investments. Staying informed will help you make timely decisions and adjust your portfolio as needed.

7. Rebalance Your Portfolio

Periodically review and rebalance your portfolio to maintain your desired asset allocation. Rebalancing helps ensure that your portfolio remains aligned with your investment goals and risk tolerance.

How to Succeed with Alternative Investing

1. Research the Platforms: Ensure the platform you choose is trustworthy and provides reliable information about the assets they handle.
2. Diversify: Spread your investments across different platforms and asset types to mitigate risk.
3. Monitor Performance: Regularly review your investments to ensure they align with your financial goals.
4. Understand Fees: Be aware of the fees associated with each platform, as they can impact your overall returns.

By leveraging the benefits of alternative investments and following these tips, you can successfully diversify your portfolio and increase your chances of success in the ever-changing financial landscape.

Conclusion

Alternative investments are an excellent way to boost returns and reduce risk by diversifying your portfolio. The platforms listed above offer a wide range of options across different asset classes, catering to various risk appetites and investment goals. Start your investment journey with these alternative platforms to build a robust portfolio that can withstand market volatility and enhance your financial security.