5 Reasons Why People Look Out for Non-Traditional Investment Avenues

08/07/2023 | 4 Comments

With the increasing volatility in traditional investment avenues like stocks and mutual funds, investors are now looking out for alternate non-traditional ways to diversify their investment portfolios and earn higher returns.

Alternative non-traditional investment avenues have emerged as popular risk management options for investors who are willing to explore financial opportunities that go beyond traditional assets like fixed deposits, stocks, etc. In this blog, we will explore the 5 reasons why investors look out for non-traditional investments and some types of non-traditional investment options.

What Are Non-Traditional Investment Avenues?

Alternative investments or non-traditional investments are financial asset classes that do not fall under conventional investment categories. Conventional or traditional investment avenues include fixed deposits, stocks, bonds, mutual funds, and cash. Some examples of non-traditional investment avenues are real estate, P2P lending, start-up equity, asset leasing, hedge funds, commodities, wine, art, and cryptocurrencies. These asset classes offer unique investment opportunities and higher returns as they usually have a low correlation to the stock market.

5 Reasons Why People Opt For Non-Traditional Investment Avenues

People choose to invest in non-traditional investment avenues due to the following 5 main reasons:

1. Diversification

Diversification is key for optimal portfolio risk management. Hence, one of the primary reasons why investors opt for alternative non-traditional investment options is to diversify their portfolios. These investment options have a low correlation with conventional investments, which can help investors to reduce their overall portfolio risk.

2. Potentially Higher Returns

Non-traditional investment avenues offer the potential to earn higher returns compared to traditional investment options. For example, investors can benefit from rental income and capital appreciation when they invest in real estate. They can also earn higher risk-adjusted returns from avenues like P2P lending and private equity investments.

3. Non-Market Linked Options

Non-traditional investment instruments are not linked to the stock market. Hence, these investment avenues can protect your capital during market volatility or economic recessions.

4. Protection From Inflation

Non-traditional investment avenues like commodities and real estate can offer protection from inflation. The value of these financial assets tends to increase during times of inflation, which can in turn help offset the impact on an investor’s portfolio due to rising prices.

5. Unique Investing Opportunities

Non-traditional investment avenues tend to offer unique investment opportunities that are not available in conventional methods of investing. For example, investing in wine or art offers a chance to own a piece of history, along with portfolio expansion and the potential to earn higher returns.

Examples Of Non-Traditional Investment Avenues

Alternative non-traditional investments include a wide range of asset classes that are not usually found in conventional investment portfolios. Here are some examples of non-traditional investment options:

  • Peer-to-Peer Lending: P2P lending is a great non-traditional investment option where investors can invest in loans to individuals through online lending platforms.
  • Real Estate: This asset class includes investments in residential property, commercial property, and real estate investment trusts (REITs).
  • Private/Start-up Equity: This includes investments in private companies or start-up ventures with a high growth potential. Such investments are considered to be highly risky but also have the potential to generate significantly high returns.
  • Hedge Funds: These are investment funds that trade in relatively liquid assets and use different investment strategies aiming to earn a high return.
  • Art and Collectables: These may include art, sports memorabilia, wine, vintage cars, coins, stamps, and other collectables. These items may have historical significance and their value may rise over time as related parties become more historic.

How To Invest In Non-Traditional Investment Avenues?

Investing in alternative non-traditional investments was earlier said to be challenging, as these investment avenues often required specialised knowledge and sometimes a high minimum investment. However, today, with the growing innovation, there are many platforms that make it easier for investors to invest in non-traditional investments. 13Karat is one such platform, where you can easily invest in P2P lending and earn returns as high as 13% per annum. P2P lending is a great way to diversify your portfolio beyond traditional investments.

To get started with P2P lending, investors can create an account on 13Karat and browse through our unique investment opportunities- 13K and 12K. After referring to the detailed information about each investment option, including the minimum investment, expected returns, and risk profile, investors can choose the option that is best suited to their investment goals.

Non-traditional investment avenues like P2P lending offer unique investment opportunities for investors, especially those seeking portfolio expansion, diversification, and higher returns. With the right investment platform, investing in non-traditional options can be an easy and effective way for investors to achieve their investment goals.