Consider Trading Outside of the Stock Market
In 2020, a lot of people who would like to manage their own financial portfolios are finding it difficult to do so. We have written before that investors are advised not to panic in times of turmoil — such as during a government shutdown, in the midst of an uncertain trade war, etc. The early months of 2020, however, have brought about some unprecedented uncertainty. Markets have crashed and rallied in a span of weeks, and generally it’s still best for investors not to panic. However, it’s an understandable time to be looking for some alternative trading opportunities as well.
Below, we’ll briefly cover a few of those opportunities, not to advise or recommend them, but to give you an idea of the options that are out there.
Commodity Trading
The commodities market is a very busy one in which investors trade everything from soybeans and oil to gold and silver. And to be clear, some of this activity does occur in the market, in that many people look to profit off of commodities by purchasing stock in related companies. In some cases though, there are more direct ways to trade in commodities without actually ever purchasing stock.
In the case of some resources, like precious metals, you can actually purchase a quantity of whatever asset it is that interests you. You won’t necessarily take physical ownership of it, but a sort of broker or service (there are plenty of trusted options) will hold your metal for you until you wish to sell it. For that matter, some conduct a vaguely similar form of investment by trading in precious jewelry and the like.
With so many commodities, you also have the option of trading through CFDs. This is a concept some associate with trading crude oil because it offers high levels of liquidity and volatility (whereas trading stock in oil companies can make for less activity). The idea in this case is invest in the idea of the price moving up (buying) or down (selling) over a period of time. So, without any stock or physical ownership, you can still invest in the value of the asset at hand.
Forex Trading
Forex trading can rightly be referred to not just as the most popular alternative investing method, but as the most attractive form of investment in the world. This is fair to say because it’s actually the largest trading market there is, with actual trillions of dollars in motion on any given day.
As to why forex trading can appeal as an out-of-market investment, it comes down to some of the same factors mentioned with regard to crude oil CFDs: high liquidity and volatility. These conditions mean that traders can execute the transactions they want to when they want to, as well as that there’s enough movement in currency values to present opportunities. Like any other sort of trading, forex requires careful strategy and close attention. But one can trade in this market through an online forex broker without a broader stock portfolio, which makes it simple in certain ways.
Fine Art Investment
In the past, the idea of buying into fine art might have seemed exclusive. We think of valuable art as being worth a great deal of money, such that only wealthy individuals can really buy or trade in it. Of late however, the notion of art investment has taken on new meaning. There are now various platforms that allow ordinary people to either buy smaller artworks or in some cases essentially purchase shares of more valuable work.
As always, there’s a lot of research that needs to be done if you’re to try this option in a responsible way. You’ll need to learn how to assess the art market, and do so without allowing yourself to be swayed by curators or others whose top priority is to sell art for as much as possible. However, with due diligence and a reliable trading platform, it is possible to generate a meaningful return via art investment, without ever getting involved with the stock market.
Venture Capital
Somewhat similar to art investment, venture capital investment has also become more accessible in recent years. We generally imagine this type of financial dealing happening only between wealthy investors and startup founders. Now, however, average people can invest in startups through so-called “angel groups” or a variety of online platforms.
These different avenues can be structured in a variety of ways. Generally though, you can find arrangements in which you provide funding for a startup in the hopes of being rewarded by its success. The reward can take different forms, but in the best of cases you may actually own a piece of the company that becomes valuable in time, making this an unorthodox but appealing investment.
Even with alternatives like these available, a lot of people taking an active role in their own financial planning wind up setting up stock portfolios. These portfolios don’t have to amount to busy, full-time jobs, and they provide people with innumerable investment opportunities. However, in tough financial times alternatives can look more appealing, and the ones listed here all represent legitimate possibilities