There is no doubt that investing in the stock market can give you excellent returns on your investment in the long term.
However, stocks are far from the only option available for those who are looking to earn high returns and build their wealth. Let us look at five prudent ways that could help you make high returns on your investment that have nothing to do with the stock market.
Rental real estate
Rental real estate is one of the few investment options that offer you two-fold benefits – consistent returns on your investment as well as capital appreciation.
Depending on your budget and preference, you can choose to invest in commercial or residential real estate properties.
Before you invest, do your due diligence and make sure the property in question is worth investing in. Some of the factors you should consider include:
- Crime rate in the locality
- Demand for residential or commercial real estate in the area
- Average rent in the neighborhood
- Average appreciation rate
It is important to note that rental real estate properties require routine, year-round maintenance.
You should be able to do it on your own or you should hire a property management company to do it for you. So, before you invest in a property, you need to take the maintenance costs into account and determine whether you would be able to earn high returns on your investment.
Real estate investment trusts
If investing in physical real estate properties is beyond your capacity, real estate investment trusts (REITs) are the best choice for you.
REITs invest in a wide range of real estate properties, such as housing, retail, offices, hotels or warehouses, and split the rental income among the investors.
REITs are mandated by law to pay out 90% of taxable income to their investors. So, you can expect to get good, consistent returns on your investment on a regular basis.
Precious metals
Investing in gold, silver, gems, and other precious metals can not only give you good returns in the long term, but can also act as a hedge against inflation.
Make sure you have a secure place, such as a safe deposit box at a bank, to store your precious metals.
Corporate bonds
Corporate bonds are issued by large companies and the rate of interest is generally higher compared to municipal and treasury bonds.
One of the risks associated with corporate bonds is that the company that issues the bonds could default and file for bankruptcy, in which case you could lose your investment.
With that said, you could choose AAA-rated bonds, which are considered extremely safe.
Peer-to-peer lending
Peer-to–peer lending platforms allow you to invest money, which will then be loaned out to customers who cannot get a loan through traditional means like banks — due to their credit score or for other reasons.
When the loan is paid back with interest, you can get your initial investment along with interest. To mitigate the risk of default associated with these types of loans, you can make several small investments instead of making one large investment.
