5 Unconventional Investments for Retirement

by | Jul 30, 2021 | Billsaver, Saving For Retirement

You are probably familiar with classic retirement investments, such as an IRA or an employee-sponsored 401(K) plan. What you may not know is that there are a number of other investment opportunities, and many experts, including PricewaterhouseCoopers, have said these investments are growing in popularity. We have compiled a list of the top five.

Please note, you may still need to work with an accredited investment professional to invest in these assets as there are legal restrictions on who can buy, sell and trade these investments.

1. Real Estate

While you may not see the sort of massive returns with real estate as you would with other investments, purchasing real estate, such as commercial or residential properties, is still a good way to protect yourself from inflation. Not only is your property likely to grow in worth at a faster rate than inflation, you can also earn passive income from rent.

Another way to invest in real estate is through a self-directed real estate IRA or a real estate investment trust (REIT). REITs are an extremely liquid asset that can be traded like a stock and allow investors to acquire an ownership interest in real estate ventures, such as apartment complexes, hotels, shopping malls, hospitals and office buildings.

2. Real Assets

Real assets is a broad category which includes a number of tangible assets that have value, such as oil, precious metals and land. Luxury goods—such as art, jewelry, rare coins and wine—can also fit into this category. You can either buy these goods directly or invest in a fund that specializes in these assets.

Gold is a popular real asset that can protect you from inflation. Goods that you can buy yourself include gold bars, coins or jewelry, but you can also work with an investor to purchase gold futures and options, stock in companies involved in gold mining, and gold exchange-traded funds.

3. Bitcoin

Bitcoin is a virtual currency that can be added to your retirement portfolio through a self-directed IRA. While the laws governing Bitcoin are constantly changing, the IRS currently only allows investors to keep digital currency in retirement portfolios. You will not be able to withdraw the funds until you reach the age of 59 1/2. If you do, you will need to pay an early withdrawal penalty.

Adding Bitcoin to a self-directed IRA is a straightforward procedure. When you open the IRA, which can be done with a transfer or rollover, you will complete a Bitcoin allocation order. This requires a minimum deposit of $5,000. There is a small upfront fee, but there are no recurring charges.

4. Invest in a Startup

Also known as “angel investing,” investors can choose to give money directly to startups and private companies instead of investing in a private-equity fund. While this is a risky proposition, since many startups fail, but you can also see high returns if you choose the right organization.

There are a number of companies to help you invest in startups, including SeedInvest and SharePost. SeedInvest accepts fewer than 1% of the startups that apply for funding and make the companies pass a due diligence process. You can start investing with them for as little as $500, which the company says is 50 times lower than traditional startup investments.

5. Peer-to-Peer Lending

Also known as “social lending,” peer-to-peer (P2P) lending allows individuals to lend or borrow money without using a bank. P2P lending helps borrowers, as they can access funds even if they do not qualify for traditional financing. It also helps lenders who can earn passive income via interest.

The obvious disadvantage is that the risk of default is high, but this can be minimized if you choose a respectable P2P lending platform, such as Funding Circle, Lending Club, Prosper or Upstart.

Conclusion

The world of unconventional investments can be complicated with a number of regulations and tax liabilities. It is a good idea to consult a professional before making any purchases.