Though the stock market has climbed rapidly over the last five or six years — to record highs at the beginning of 2020 — the day-to-day volatility of the market over the last four months has made putting money into the market anything but predictable.
The global pandemic and the sky-high unemployment rates that accompanied it roiled the economy significantly. Although we are just now starting to reopen the nation (and the market is responding positively), people are waking up to the understanding that the stock market may not be the best place to invest your money right now.
Thankfully though, there are several ways you can build real wealth without investing in the stock market at all. These investment vehicles offer more control, more security, and a lot more predictability than the market ever could — particularly if you are looking to buy individual stocks while hoping for the best.
We break down five of the best ways to build wealth without investing in the market below, highlighting the kinds of investment vehicles that can transform your financial future not only in the short-term but in the long term as well.
Let’s get right into it.
Real estate is far and away the most popular investment alternative to the stock market. While it requires a bit more money to get into initially, many find it to be more predictable, more stable, and capable of producing more consistent returns within the market ever could, too.
Now, you may not be able to find a property for sale for a few thousand dollars that turns into a few hundred thousand dollars because of a bit of news in real estate the way you might with the stock market — but you are going to be able to own real, tangible assets with tangible value in a way that the stock market rarely provides.
Best of all, there is a multitude of options to invest in real estate. You simply need to find a specific investment that fits your budget and financial goals.
You could choose to invest in commercial real estate or residential and rental properties. You could choose to flip homes or take the Airbnb approach — and that’s just the tip of the iceberg.
At the end of the day, the wealth-generating potential with real estate is off the charts.
Entrepreneurship is seldom thought of as an investment opportunity but that’s a major mistake.
There may not be a better path to true financial freedom than by setting out to build a business that you are in complete and total control over.
The old walls and barriers of entry to building a business from scratch have mostly fallen by the wayside. This is in large part to the democratization of technology needed to build businesses, the reach of the internet, the opening of truly global markets, and the fact that people are so comfortable purchasing products and services from strangers over the web.
This is not to suggest that building a business is going to be easy or without risk — nothing could be further from the truth. But, you have far more control over your success or failure when you choose to build a business than you will with most any other investment out there.
Silver, gold, and a handful of other precious metals and gemstones remain incredibly valuable investments – particularly if you can purchase these assets in physical form.
Every time there’s a bit of global unrest (like there is right now, for example), the value of silver and gold skyrockets. By acquiring coins, bullion, nuggets, ore, and loose gemstones, you’re able to tangibly hold these assets in a way that you might not be able to with more traditional investments — such as stocks, for example.
Your wealth-generating possibilities with these assets are going to be dictated by market prices for the most part (they are very much commodities), but historically these are some of the most secure and “future proof” investments you can choose to make.
Paying Down Your Debt
Paying down your debt may not look like much of an investment – after all, it represents wealth out the door (the short-term, at least) – but there’s no easier way to increase your net worth than eliminating your liabilities and your financial obligations to other individuals.
Believe it or not, there are plenty of millionaires (and multimillionaires) that have networks hovering around zero simply because they are carrying so much debt.
They may appear to have all the trappings of wealth as far as physical assets are concerned, but if they are paying off loans used to secure those materialistic purchases, they not only end up paying a lot more in the long-term (thanks to compounding interest), but the assets that they’ve purchased usually lose value at the same time.
This ends up putting them deeper in the hole.
As soon as possible, you want to aggressively begin paying down your debt, looking to get as close to zero as you can – and maintaining zero for as long as possible.
This is not to suggest that you can never take on debt. Sometimes you need to take on some debt to skyrocket your path to financial freedom, but you have to be very deliberate, very strategic, and very intelligent about the approach that you take.
Peer to Peer Lending
Nontraditional lending services like peer-to-peer lending have becoming credibly popular over the last few years, especially with traditional lenders like banks and credit unions pulling back a little bit on the types of loans they are willing to offer.
Rather than take advantage of these peer-to-peer lending services as a borrower, though, you may want to consider diving in on the loan fulfillment side of things. You can expect to enjoy average returns of between 8% and 12% on your investment pretty consistently – and as the industry grows the wealth-generating possibilities from this kind of financing are only going to grow.
At the end of the day, as you can see, there are lots of opportunities to build real wealth without having to jump headfirst into the stock market.
A combination of all these approaches (and investing in stocks) is probably the best way to secure your financial future, but there’s absolutely no reason whatsoever that you cannot take advantage of these channels first to jumpstart your wealth creation journey.
Image by: Cygig