Alternative investments are gaining notoriety as the world
economy begins to flounder.However, alternative investments are more
risky than any other investments because they tend to fund what is
called legal loan sharking.
One example of this is the Prosper marketplace on the internet, it isn’t necessarily a bad company, but the risk
is still high because they use your investment to fund loans for people
with less than perfect credit histories.The average APR (Annual
Percentage Rate) with Prosper is around 25%, this is higher than most
Other alternative investments include
Closed-Ended Mutual Funds and REITs (Real Estate Investment Trusts),
both of which have double digit APRs, usually between 12%-17%. The thing
with closed-ended mutual funds is they can only be bought when a
shareholder decides to sell his or her shares, so they are limited by a
company’s IPO (initial public offering).
REITs are probably more desirable than
either of the previously mentioned alternative investments because
they’re bought and sold just like common stock. The best way to gain
access to these types of investments is to open an account on an online
trading platform like ING, Scott Trade, or eTrader to name just a few.
Now, when it comes to investing in
anything, not just alternative investing, there is going to be risk.
Think about what has happened since late 2008 when the world trade
market began to collapse, most bank passbook savings accounts were close
to 3% APR, now all the same passbook accounts are less than 1%, the
highest being around .8% APR.
In order to make any profit in these
accounts you would have to already be a multi-millionaire and if you
were a multi-millionaire you wouldn’t likely waste your time with a
passbook savings account because you have more money that could be at
risk without hurting you too much financially.
Just think if you had only $100,000 you
were willing to risk, your return would only be $800 a year with a
passbook savings account or up to $17,000 a year using a closed-ended
mutual fund or REIT. Then if you are willing to take on the riskiest
investment; the Prosper marketplace your return would be more than
$25,000 a year. This kind of return on investment could be enough for
many people to live off of while no longer needing to be employed. Of
course this would only be possible without debt weighing a person down.