Top 5 Alternatives of Real Estate Investment

Undoubtedly, real estate is one of the most popular investment avenues in the world. It offers great returns over time and helps you grow your wealth exponentially. However, you need large capital to invest in real estate. If you do not have enough funds to invest in real estate properties, then here are the top 5 real estate investment alternatives you can consider. Scroll down and learn about their features, benefits and drawbacks.

Top Real Estate Investment Alternatives

Peer-to-Peer or P2P Lending

P2P lending connects people who need money with those who have money to lend. On P2P platforms like 13Karat, you can invest in P2P-enabled investment products and earn great returns in the form of interest payments, without any involvement of banks. There are several benefits of P2P lending. You can earn higher interest rates compared to traditional savings accounts or bonds. You can also spread your investment across multiple loans to reduce risk. Moreover, many P2P platforms allow you to start investing with a small amount of money.

Drawbacks

• Borrowers might not repay their loans, and this could lead to losses.
• P2P lending is less regulated than traditional banks and hence, the risk is higher compared to traditional banks and regulated financial institutions.

Also Read – Diversifying Your Investment Portfolio with P2P

Stocks and Shares

You can also buy stocks of a company and have ownership in it. When you buy stocks, you become a part-owner and can benefit from the company’s success. It is one of the best alternatives to real estate investment if you wish to earn high returns over time and grow your wealth exponentially. But how does it work? Well, stocks offer significant gains if the company performs well. Moreover, stocks are easy to buy and sell and this provides more liquidity and better flexibility. You can invest in various companies to spread out your risk.

Also Read – Stock Market Vs Real Estate – Where Should You Invest

Drawbacks:

• Due to market fluctuations, stock prices can go up and down quickly, which can be risky.
• To make smart investments, you need to invest time and study the companies and market trends.

Mutual Funds
Another investment alternative is mutual funds. Mutual funds pool money from many investors to buy a mix of assets like stocks and bonds. Mutual funds invest in a variety of assets, which helps reduce risk. One of the benefits here is professional management, which means experts make investment decisions for you. Also, many mutual funds have low minimum investment requirements so you do not have to worry about capital.

Drawbacks:

• Mutual funds charge management fees, which can affect your returns.
• You have limited say in the specific investments the fund makes.

Bonds
Bonds are loans you give to governments or companies. In return, they pay you regular interest and return your principal amount at maturity. As bonds provide regular interest payments, they offer you a steady income. They also have low risk as government bonds are generally safer than stocks. Here, interest rates and payment schedules are fixed.

Drawbacks:

• They offer lower returns compared to stocks.
• If interest rates rise, the value of your bond might drop.

Exchange-Traded Funds (ETFs)
You can also consider exchange-traded funds or ETFs as one of the real estate investment alternatives. These are investment funds traded on stock exchanges and hold a collection of assets like stocks or bonds. ETFs offer exposure to a broad range of assets and usually have lower management fees compared to mutual funds. You can buy and sell ETFs throughout the trading day just like stocks.

Drawbacks:

• The value of ETFs can fluctuate with the market.
• Some ETFs can be complicated, especially those focusing on niche markets.

Conclusion
So, these are some of the alternatives you can explore to get new opportunities for building wealth. If peer-to-peer lending is what you are looking for, then download the 13Karat app right away. With 13Karat, you can invest in our 6-months investment plan and 3-month plans to earn returns of up to 13% per annum.