5 Investments That Beat Bear Markets

Although many people want to believe that stocks always go up, a quick look at the historical stock market trends will show that markets also can go through prolonged phases of slowdowns and declines.

In those bearish times, it makes sense to do some out of the box thinking about where to invest your money to gain attractive returns.

Here are a few alternative investments to consider in situations such as this.

Build your real estate holdings

Investing in a house or multi-family unit can generate both asset value appreciation over time and regular rental income. If you are not prepared to handle the responsibilities of a landlord, you can hire the services of a property management firm.

If investing in a physical property is beyond your budget, you may consider partnering with other like-minded investors and jointly buy and manage a property.

You might also consider investing through real estate investment trusts (REITs), which are professional groups owning and operating income-generating real estate assets.

Give your portfolio the stability of precious metals

In bearish times, savvy investors turn to precious metals, such as gold and silver to insulate their portfolios from extreme price declines.

Whenever the stock markets are losing steam precious metals tend to outperform. Gold, in particular, is considered a safe haven investment when the foreseeable economic future looks bleak.

To increase your exposure to the yellow metal, you may physically buy and hold gold bullion, such as coins or bars, or invest through gold ETFs (exchange traded funds), gold IRAs, or put money in gold mining stocks or gold mutual funds.

Become a proud (and profitable) owner of artwork

Wealthy people have long known the power of investing in world-famous art. It can be a great way to diversify your portfolio in a bearish economy and earn outlier returns.

Over the last three decades, art has outclassed the S&P with an average annual return of 14.1%.

The good thing is that you don’t have to bet all your savings in an illiquid asset or be ultra-wealthy in order to invest in iconic artworks by masters like Pablo Picasso or Andy Warhol. You can invest through online platforms that enable buying and selling of shares of famous paintings, and own a piece of a magnificent work of art.

Drink the finest wines and invest in them too

Investing in rare and exotic wine is an excellent form of alternative investing when you are looking to ride out the vicious boom and bust cycle of the traditional stock market.

With a robust, recession-fighting average return of 11% a year for the last few decades, wine investing is an option worth considering in times of economic downturn.

You don’t have to be a wine aficionado or a part of exclusive wine club to enter this market. You may invest through online investing platforms specializing in wine investing and own fine wine without taking the trouble of securing, storing, or authenticating your wine.

Peer-to-peer (P2P) lending

Online P2P lending services provide loans for personal use and businesses. You can participate in P2P lending along with a pool of investors, and fund borrowers that qualify for a loan.

For your share of money lent, you will receive a fixed monthly repayment including interest. While the risk here is that no bank is involved in peer-to-peer lending, the reward is that the returns you can get on your money can be market-beating.