Many Australians likely made their initial investments with traditional stocks and bonds to maintain balance. That’s a fantastic start! As you get richer, though, you might start to wonder, “What else is out there?” How can I really take the most risks and make the most of new opportunities to grow? If that sounds like you, you’ve come to the right place.
It can be very helpful to look at investments other than the usual ASX-listed stocks and government bonds. The world of investing is as big and diverse as our beautiful country. Diversification is more than just getting a lot of different stocks. It also means having a lot of different types of assets that respond to changes in the market in different ways. Think of it like putting together a balanced sports team. You wouldn’t pick all forwarders, would you? You also need defenders and midfielders, each of whom plays a different role.
That being said, let’s look at some intriguing ways to broaden your business and maybe add some muscle.
Building things: the Australian dream and more
Of course, Aussies are crazy about real estate. Many people really want to own their home, so they are not new to investing in real estate. Real estate can be a great way to diversify because its value doesn’t always go up or down with the stock market. If you pick the right property, it can keep bringing in rental income and maybe even capital growth, even if the stock market is unstable.
Buying a downstream rental property isn’t the only way to get into real estate. With a real estate investment trust (REIT), you can invest in a group of commercial, retail, or industrial properties without having to handle the tenants yourself. Like buying shares, buying trust units gives you the right to regular income payments. For those who are considering a direct investment, it is very important to get good property investment tips. The process includes:
- Fully researching places
- Getting to know your ideal tenants
- Learning how to handle the ongoing costs and duties
Prepare first, then jump in!
Setting the Stage for Commodities: Gold and Other Real Things
Things like oil, natural gas, food, and precious metals are examples of commodities. Commodities are raw materials or food items. These can be a beneficial way to protect yourself from inflation since their prices tend to go up when the value of money goes down. Gold is a commodity that is often invested in and lasts a long time. For thousands of years, people have viewed gold as a secure investment that maintains its value.
A lot of investors choose to buy bullion gold instead of saving the coins or bars themselves. Some people like the physical form of gold because, unlike paper investments, it makes them feel safer. You could also buy shares in gold mining companies or invest in gold through exchange-traded funds (ETFs) that track the price of gold. Although gold’s price changes like the prices of all investments, it is a good way to spread your risk because it has historically moved in a way that is different from stocks and bonds.
Venture capital and private equity can help you release potential.
We’re now looking into areas that were mostly used by institutional investors and very rich people in the past, but they are becoming easier for more people to get to. Private equity involves investing in privately owned businesses that do not trade on a public stock market. Usually, the goal is to help these businesses grow so that the investor can get a favourable return on their money, possibly through an IPO or a sale.
Venture capital is a type of private equity that focuses on early-stage businesses with a lot of room to grow. Think about the next tech star! Even though many startups fail, investing in them is usually riskier. If you invest in a successful startup, however, you could earn a significant profit. Most regular Australian investors get their hands on private equity or venture cash via investment platforms or specialised funds. In general, these assets are longer-term and less liquid, so it is important to understand their characteristics.
Exploring newer areas, such as peer-to-peer loans and other financial opportunities, is essential.
The world of finance is always shifting, and new business opportunities are always appearing. P2P lending, for instance, uses the internet to connect people who want to borrow money with people who want to give it to them. The lenders are investors like you. You could give money to people or businesses as an investor and get interest in return. Even though this can bring in good money, there is a chance that the user will not pay back the loan, so it is important to spread your money out among several loans.
Other assets that could be used instead include:
- Investments in infrastructure (like toll roads or airports)
- Collectibles (like art, wine, or old cars, but you need to know a lot about these!)
- Some other types of funds that use smart tactics
The key is to do a lot of research and understand that investing in anything less standard comes with some risks.
Getting Fit: It’s Mostly About Balance
By adding things to your portfolio besides stocks and bonds, you’re adding new perspectives, not rejecting what you already know. Depending on your situation, how much risk you are willing to take, your financial goals, and the length of time you have, the right mix will be found.
To navigate these less-explored paths, it’s advisable to begin cautiously, conduct thorough research, and potentially seek guidance from a qualified financial advisor. They can help you see how different assets might fit into your overall plan and make sure you’re not taking on more risk than you can handle.
Investing is an interesting field with lots of opportunities for people who can see past what they see. Thinking about adding new types of investments to your portfolio will help you build a stronger one that can handle the ups and downs of the market and help you reach your long-term financial goals.
