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Alternative Investments

4 Alternative Investments That Could Help You Grow Your Nest Egg Even More


Mehmet Hilmi Barcin / Getty Images/iStockphoto

Mehmet Hilmi Barcin / Getty Images/iStockphoto

According to the Federal Reserve Survey of Consumer Finances (1989-2022), the average retiree (ages 65 to 74) has $609,230 in retirement savings. For older individuals (ages 75 and older), this number drops to $462,410.

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Wherever your retirement savings are at, it doesn’t hurt to have a little more than you need. After all, you never know what life might throw at you that even your best-laid retirement plans didn’t quite account for. And even if you don’t end up needing it yourself, you might want to leave something behind for your descendants.

Whether or not you’re saving enough already, here are some alternative investments to consider if you want to grow your nest egg even more.

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Fractional Real Estate

Investing in fractional real estate could round out your portfolio and boost your retirement savings. It’s a more affordable way to get into the world of real estate investing than, say, purchasing individual properties. It’s also easier for those who might be unable to purchase property due to financial or credit reasons.

“With fractional investing, investors can purchase a piece of a property at a much lower price point rather than deploying large sums of capital to buy an entire home,” said Alex Blackwood, CEO and co-founder of the fractional real estate app mogul Club.

“Fractional ownership means multiple people can invest in a home, basically owning a fraction of the home and, therefore, receiving pro rata returns based on their percentage of ownership,” he added.

The greater your investment, the more you could potentially see in returns,” Blackwood said. “Fractional investing also requires far less time and effort than full-on property management.”

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Private Credit

Private credit is a privately-negotiated loan between two parties — generally an alternative lender and an individual borrower. They usually have floating interest rates, which may fluctuate based on economic conditions.

“In a volatile market, private credit stands out for its ability to deliver attractive yields with lower correlation to public market swings,” said Nelson Chu, founder and CEO of Percent.

Chu added that private credit can provide the opportunity for consistent income and boost financial security in retirement.

Investment Property

Fractional real estate isn’t the only way to invest in real estate. There are also real estate investment trusts (REITs) and investment properties to consider. If you’ve never invested in real estate at all, even a simple rental property could be worth adding to your portfolio.

“There are various ways to invest in real estate, but when you go the route of owning property and having tenants, that is a unique kind of investment that can also require some time and effort (on top of excellent payouts),” said Seamus Nally, CEO of TurboTenant.

Just be aware that these types of investments typically require more time and effort.

“Whether it be buying an investment property outright and turning it into a long-term rental or transforming your basement or guest house into an Airbnb, these are investments that require a bit more than just your money,” Nally said.

Self-Directed IRA (SDIRA)

Unlike a traditional IRA, a SDIRA generally gives you more control and flexibility over your investments. It also lets you expand into more niche or alternative assets.

To get started, you’ll need to find a custodian.

“Research custodians specializing in alternative assets, such as Horizon Trust. They handle paperwork and ensure transactions comply with IRA regulations,” said Jace Graham, CEO of Rising Phoenix Capital. “You can contribute eligible income or roll over funds from existing IRAs or 401(k)s to fund your SDIRA. There are contribution limits as with any IRA.”

As for what you can invest in, you’ve got options like oil and gas mineral funds, precious metals, crypto, mortgage notes and bonds.

Do Your Research and Be Aware of Risks

Before committing your money to any kind of investment — alternative or otherwise — do your due diligence. Also, be aware that risk levels and returns can vary significantly depending on the asset class you choose and how much you put into it.

If you’re trying to grow your nest egg, don’t invest more than you’re okay with possibly losing. That way, even if it doesn’t pan out, your retirement won’t be negatively impacted. And if it does, then you can reap the rewards then.

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This article originally appeared on GOBankingRates.com: 4 Alternative Investments That Could Help You Grow Your Nest Egg Even More



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