As of March 13, 2021 Bitcoin is trading at $59,920.10 U.S Dollars. To think that this same cryptocurrency was only trading at $1 in 2011. There are many accounts of companies that are trading astronomically higher today than their initial public offer (IPO). Apple, Google, Facebook are examples of companies that if you invested in them in the beginning you would see substantial gains today. 

Many people beat themselves up because they believe they had missed out on a once in a lifetime opportunity. Keep in mind for every Facebook, Amazon, and Google there are many more companies that fail. There is no point in feeling like you’ve missed out on a great investment opportunity because the stock market isn’t the only investment choice. There are many other ways to invest that have great opportunity and provide many rewards and fulfillments. 

WHAT IS INVESTING

Before we go into the alternative to investing in the stock market let’s first go over what is investing. Dictionary.com provide several meanings for the word invest but “to use, give, or devote (time, talent, etc.), as for a purpose or to achieve something” is the one we will use here today. Other meanings speak specifically of money without mentioning time which is only a narrow aspect of investing. We will exclude investments that don’t have a measurable monetary outcome. For example, paying for your children’s education is an investment which has the reward of knowing your children are better prepared in life. That may be rewarding to the individual parent but it is not quantifiable. Now, if you choose to lend money to your children and they choose to pay you back with interest that’s an example of a measurable monetary outcome. 

1. STARTING A BUSINESS

The first investment alternative to the stock market is starting a business. Starting a business is not for the faint of heart. Many new businesses fail but if you have a product or can provide a service that is in demand this may be a better alternative to the stock market. Be honest with yourself if this is something that you want to do or capable of doing. It requires commitment and those that are passionate and determine increase their odds of success.

If you’re currently employed full time and have extra time and cash, a side business can be perfect for you. It doesn’t have the demand of running a business full time. Hobbies that you can monetize makes perfect side business. If you’re good with a camera or a needle, photography or sewing can make great side businesses.

If you have the money and not the time you can hire someone to run your business for you. You will still need to commit some time to the business but the everyday activities can be handled by someone else. Don’t be discouraged if you’re unable to find a perfect fit right away. Think long term and progress consistently.

2. BUYING A BUSINESS

The next alternative to investing in the stock Market is buying a business. You’ve made some self assessment and realized that starting a business is not for you. You aren’t excited by the challenges that come with starting a business. Instead you can explore the possibility of buying an established business with a sound business structure and managing team. Before you buy a business take the time to familiarize yourself with the business and the industry. Do your due diligence. Even though you’re not planning to run the business yourself you should keep up with what is going with your business.  This alternative to investing in the stock market is suitable for those that have the money, not the time, and also familiar with the particular business they are buying. 

If you don’t have the cash to buy a business but you are creditworthy, a loan can be a very good option. Make sure the numbers make sense. For the person who doesn’t have the time, seeking counsel from a reputable professional is your best bet.

Also if you find yourself in a situation where you don’t have the time, cash, or the opportunity to seek a loan but a great opportunity to buy a business cross your path, explore owner financing.  Owner finance is when the seller financed the loan. In the case of buying a business the buyer would make payments to the owner directly for half or the full amount or what’s agreed upon. If the owner of the business chooses to finance half the cost for a particular time for example five years the buyer will then explore other options like a traditional bank, family or friends to cover the rest.

A great example of buying an established business is buying a franchise. If you choose to go this route make sure the requirements sent by the franchise is suitable for you.

3. INVEST IN A FRIEND’S BUSINESS

Another alternative to investing in the stock market is to invest time or money into a friend, family or someone you know business. This is a great opportunity because you get the opportunity to invest early into a potential business. Imagine knowing Steve Jobs or Jeff Bezzos in their early stage of them starting their businesses. You will get the opportunity to invest before the business blows up and becomes very valuable. Even though these people are friends, family, and acquaintances, please take the time to understand and do your due diligence.

If you don’t have the money to invest in an acquaintance’s business, you can invest your time. If you possess a certain skill or talent you can exchange it for equity or future income. If you possess accounting or social media marketing skills, you could take care of the accounting or the social media account of a friend’s business for an agreed upon ownership percentage of the company. Also, if equity is not an option or immediate payment is not an option, future payment can also be an option.

Concerns When investing In friends, famly, and acquaintances businesses

When investing in a family or a friend’s business all the potential risk of investing in a business is present as in any other business. The benefit is that you have the opportunity to invest early before anyone else but it also has its cons. One of the potential risks of investing in someone you know business is the informality in business interaction that is present. Doing business with a friend may have some people believe they don’t need to have contracts. They may believe that verbal agreements are enough  but this can create future problems. Also a person may not take their friends’ business as seriously as they should and this can put strain on the relationship. To avoid future problems, be as professional as possible and take the potential business seriously.

4. INVEST IN PRIVATE COMPANIES

Another alternative to investing in the stock market is to invest in private companies. Private companies are companies not publicly traded on the stock market. They are governed by different rules and do not have to file financial statements with the Securities Exchange Committee (SEC) or make any information available to the public. On the plus side private companies are not under the same pressure to perform and beat public and analyst expectations to perform. They can focus on long term strategy and product instead of only focusing on short term quarterly performances.

Due to the fact that information may not be publicly available for private companies, finding one suitable to invest in will take some leg work. A great place to start in your search of possible private companies to invest in is the internet. There are many sources online that can set you on your path.

5. SELF INVESTING

There are only so many hours in the day and only so much disposable income we have available to us. You can choose to take your time and money and put it in yourself. Self investing can take on many forms. It can be going back to school, learning a new skill, or self education/self improvement. What differentiate self investment from self improvement is the investment in self for tangible financial gains. 

Earning a degree, getting an advanced degree, or learning a new skill may not increase your potential to earn more income. Not to undermine the benefits to society and self when a person chooses to improve themselves but it is important to have a monetary expectation when you’re investing your time and money.

With the many online courses and self help book people overlook two factors on their self education journey. One is repetition and practice and the other is how to market and monetize the new skills that they have learned. For example if you are teaching yourself to code you must make time to practice each new skill you learn. Knowing the practical steps to creating a web page is not the same as creating ten web pages repetitively. Also in order to make the most of the time and effort of learning a new skill you must learn how to use it to increase your income.

6. REAL ESTATE

The possibilities are endless when it comes to real estate investing. You can buy, fix up then sell a property. You can buy a single family home and rent it out. You can buy apartment buildings. You can also buy commercial real estate such as office spaces and warehouses. There is also Real Estate Investment Trust (REIT). A REIT is a pool of real estate investment that you can buy shares of. There are different types of real estate investment trust some are publicly traded and some are private. Do your research and see which one is right for you.

FINAL THOUGHT

The saying “there’s many ways to skin a cat” is also true for investing. If you’re motivated you can find many lucrative alternatives to the stock market. The goal is to think open minded and embrace the meaning of investing which is to put time, money, effort, etc into something with the goal of getting back a future monetary reward.

The above alternative investments to the stock market are few among many. Take the time to investigate and explore the choices above. You’re not limited to one or two but as many as you can possibly partake in. The stock market is also an option, it’s just not the only option.

When investing in alternative options rather than the stock market it is important to have a goal. Some methods may not be right for you based on your current situation. If you lack the time starting and building a business from the ground up may not be right for you. If you have the time but lack the money self education may be a great option to increase your earning power.