WHO IS INVESTING IN YOU?
One of the top wealth-building strategies may be unpopular, but if you’re going to build long-term wealth – don’t focus on investing in the stock market but invest in yourself. Build your “investment catalog” by having a focus on personal development, education (not necessarily a formal, degreed education), and areas to invest in that will yield long-term growth potential.
Here are a few ideas.
1. Invest in a rental property
Purchasing property is often considered the first step on the path to financial freedom.
Rental investments have the potential to generate high returns and build equity. However, being a landlord can turn an investment into a job. Depending on your motivation as an investor, you could have an active approach where you take on the responsibility of maintaining the property or a passive one by involving a property manager. If you’re not interested in managing tenants and handling maintenance, you’ll need to hire a property manager and that can cut into your returns.
Additionally, forced appreciation is one of the fastest ways to get the most out of your rental property. Forced appreciation is when a property owner increases the property value by anything from completely renovating a home to adding an extra bathroom. Renovations can get expensive quickly, especially if you’re not doing them yourself. If you do decide to go this route, make sure you do your homework and vet contractors before any work begins.
2. Invest in alternative assets (beyond real estate)
Alternative assets represent an alternative to the stock market such as real estate, marine, litigation, art, and commercial finance. These asset investments have the potential to provide returns along with typically low stock market correlation while being backed by collateral. They require less time and energy than buying and managing physical investments such as rental properties.
3. Invest in a franchise
A franchise investment can be a great way to diversify your portfolio and grow wealth. A franchise is a license you buy that allows you to run a business under the name of an already-established business. For example, a franchisee can buy a license to open up a Subway, Burger King, or even a shoe store.
However, one of the biggest drawbacks to investing in a franchise is quantity. It typically takes several locations to generate wealth and this may require investors to take a more direct role. A great first step would be attending a trade show specifically for franchise opportunities.
Not sure where to start?
Don’t wait until tomorrow to start considering alternatives to the stock market. Whether you started looking into it as a result of the market downturn or have wondered if there were other ways to invest, options do exist outside the stock market. All it takes is a willingness to educate yourself, adapt your mindset, and be motivated to build wealth outside the stock market.
