3min
Apr 23, 2024
At Savvly, we believe that the best retirement options are driven by low-cost, market-tracking investments over time. But the financial landscape continues to evolve, bringing forward new opportunities beyond traditional stocks and bonds. If you're behind on your retirement plan or on the lookout for high-return options to boost your nest egg, you could consider diversifying your portfolio with alternative investments.
Alternative investments can spice up your strategy, but like any investment, they come with risks. The old saying “there’s no such thing as a free lunch” holds particularly true for alternatives. This risk-reward tradeoff is a fundamental principle in finance — higher potential long-term gains often require taking on greater volatility and short-term uncertainty.
With that said, let's dive into some of the top alternative investments that are making waves this year. Perhaps they might fit into your overall investment approach.
Spoiler alert: Savvly — the world's first market-driven pension — is one of them!
1. Green Energy Projects
The shift toward sustainable and renewable energy sources is not just good for the planet — it's also creating fertile ground for investors and opportunities outside traditional markets. From solar energy farms to wind power projects, investing in green energy is becoming a lucrative trend. Governments worldwide offer incentives for green energy initiatives, which could mean stable returns for investors. It’s a win-win that feels good and can financially make sense for some.
2. Real Estate Investment Trusts (REITs)
REITs have long been a go-to for diversifying investment strategies, but this year, niche sectors like healthcare and industrial real estate are the stars. Thanks to the rise in e-commerce and healthcare advancements, these areas are primed to surpass the broader real estate market. For those planning their retirement, REITs can provide a reliable income stream through dividends, making them a solid pillar for a retirement strategy.
3. Fine Art
Whether you're acquiring art directly or through funds, adding art to your retirement strategy can potentially boost the returns of your portfolio. Investing in art might seem intimidating, but with new platforms like Masterworks democratizing access to this once-exclusive market, it’s more accessible than ever. Art can be a hedge against inflation and has a low correlation with other asset classes, making it an excellent diversifier. The key is to appreciate both the aesthetic and economic value of art.
4. Crypto and Blockchain
The crypto world is constantly buzzing with innovation, and while it's had its ups and downs, the underlying technology — blockchain — is steadily gaining traction. The resurgence in Bitcoin's price and the launch of Bitcoin spot ETFs by major financial institutions are compelling indicators that cryptocurrency has matured and is here to stay. Additionally, the intersection of blockchain technology with AI is opening new frontiers. Whether you're investing directly in crypto or companies leveraging blockchain for AI, this sector may have major growth potential. As always, the high reward comes with high risk, so it's essential to proceed with caution and do your due diligence.
5. Peer-to-Peer Lending
Peer-to-peer (P2P) lending platforms have transformed personal and small business lending by connecting borrowers directly with lenders. As an investor, you can receive higher returns compared to traditional banking products, albeit with a higher risk. Diversifying your investments across various loans can help manage risk while providing a steady income stream.
6. Specialty Finance Companies
Companies that provide niche financial services — like those specializing in patent financing, music royalties, or litigation finance — offer investors exposure to unique, less crowded markets. These investments can provide attractive yields and add a layer of diversification to your portfolio that can be hard to find elsewhere.
7. Collectibles
From vintage wines and luxury watches to rare coins and comic books, collectibles have a charm that no other investment can match. While they can be highly volatile and require a bit of insider knowledge, the emotional and financial rewards can potentially be significant for those who know how to play the game. Fun fact: our Founder & CEO, Dario, is a wine enthusiast and wine collector!
8. A market-driven pension
Savvly is an alternative investment for retirement. It’s the world’s first market-driven pension designed to give you easy and affordable financial security for life – at a fraction of the cost of an annuity or traditional index fund. It’s a new solution that can offer long-term income when you need it most. That way, you can have peace of mind knowing you’ve got an additional income stream coming in when you’re in the decumulation phase of life. The best part? It can offer market returns plus an additional long-life bonus, made possible by partially giving up some investment liquidity.
The bottom line
Diversification is always the key to a healthy investment portfolio. Alternative investments are not for the faint of heart, but they are an exciting way to add some pizzazz to your portfolio. It’s important to research thoroughly, consider how these options fit with your overall financial goals, and potentially consult with a financial advisor. Keeping an eye on these alternative investments could potentially help boost your nest egg for retirement.
