“The secret to investing is to figure out the value of something – and then pay a lot less.”
— Joel Greenblatt
We’re halfway through 2024.
It’s the perfect time to start talking about the best alternative investments I’ve found so far this year.
I’m always looking at new assets.
Our podcast and our YouTube channel both feature awesome discussions on new trends.
We’ve had people come on and talk about everything from coffee farm investing to debt funds.
Alternative investments are almost like a fairy tale, according to this article.
Investing in these assets can lead to lower volatility and powerful diversifying effects.
You’ll also have low correlation with stocks and bonds.1
Sounds like a pretty sweet deal to me!
1. Real Estate is Coming Back
Real estate is coming back in 2024.
In the last couple of years, we haven’t done many real estate deals.
We’ve done maybe one development deal.
However, we’re now starting to get back into the multifamily space.
We’re also getting into some other real estate spaces.
There are a few things driving this.
One is that rates have risen significantly.
We’re now seeing pretty significant distress in the market.
Warren Buffett says to be fearful when others are greedy and greedy when others are fearful.
There’s some fear in real estate right now.
But if you look hard enough, you’ll find a deal.
We’re working with a partner to look at over 200 different real estate deals.
I am confident we will find one.
Multifamily with the right debt can be amazing.
If you have the wrong debt, it can be terrible.
That’s something I’ve learned in the last few years.
You need to get into deals that have the right debt.
Debt funds are an amazing resource.
If you don’t know, a debt fund loans money out to people doing real estate deals.
There are different types, like a flipper fund.
I’m not a big fan of flipper debt funds or mezzanine debt or second position debt.
If something doesn’t work in those 2nd or 3rd position deals, you’ll have a higher risk of loss.
But a first position fund really allows you to be in a safe place.
Let’s say you’re at 50% to 60% loan-to-value.
If somebody stopped paying the mortgage, you could take over the property and only have 50% to 60% in the deal.
That’s amazing!
2. Private Equity
The second alternative investment is private equity.
You may have heard of buying businesses but you may not want to operate said business.
Many aspiring retirees want to find a way to sell their businesses.
We’ve looked at some of these businesses and have found a few types we’re interested in.
E-commerce businesses sell products online.
According to this study in the Jurnal Ekonomi, Manajemen, e-Commerce benefits entrepreneurs by reducing costs and increasing customer loyalty.2
Local businesses can sell at less than 5x earnings.
These are both huge cash flow businesses that offer incredible opportunities.
There are ways to get into these assets as a passive investor.
We’re creating opportunities in this space right now.
Stay tuned to hear more about them!
3. Precious Metals
The third investment is precious metals.
Some may say that’s not an investment because it doesn’t produce cash flow.
What people don’t realize is that for 5,000 years, precious metals had monetary history.
You could take a $20 bill, go into a bank, and they would give you an ounce of gold.
That was up until the early 1900s.
The economy used to operate by a gold standard.
There’s a limited amount of gold and other metals in the world.
It costs money to get these elements out of the ground.
They’re not just used for monetary purposes, either.
Precious metals are used for different electrical components.
Silver is needed for a bunch of green technology.
Gold has increased in value about 22% in the last eight months.
Precious metals are a hedge against inflation and against market volatility.
When stocks go down, gold and silver actually can go up.
It’s nice to have assets that don’t have any correlation to the state of the economy.
I’m a big fan of physical precious metals specifically.
When you have physical metals, you have something called counterparty risk.
If you have an ETF that says you own gold in a particular fund, who will get the metals if there’s a run?
Probably not you.
If you store your metals, you don’t need to worry about that.
In conclusion, diversifying outside of traditional investments can offer you protection and growth.
We’re at a unique place right now.
Over the next three to five years, we’ll see some incredible inflation in the cost of real estate and other commodities.
You should get away from cash and start investing elsewhere.
When the Fed can print more dollars, that’s not good for any investor with money in only cash.
Now I want to hear from you!
What alternative assets are you looking at right now?
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
Works Cited
1. Richard M. Ennis. “Richard Ennis’s Insights: The Fairy Tale of Alternative Investing.”, 31 (2022): 11 – 16. https://doi.org/10.3905/joi.2022.31.4.011.
2. Nabila Salsahbilah and Z. Nawawi. “Application of the Benefits of E-Commerce for Entrepreneurs.” Jurnal Ekonomi, Manajemen, Bisnis dan Akuntansi Review (2022). https://doi.org/10.53697/emba.v2i1.720.
