Like HowStuffWorks on Facebook!

10 Reasonably Safe Alternative Investments


1
Real Estate
Real estate investment groups contribute money to companies that purchases large properties like condos developments.
Real estate investment groups contribute money to companies that purchases large properties like condos developments.
©iStockphoto.com/narvikk

Historically, real estate has been a very popular alternative investment. Of course, the 2008 crash in the U.S. real estate market made many nervous about investing in real estate. But with prices still extremely low, real estate can be a good investment opportunity. The three most accessible ways to invest in real estate are to buy rental property as an individual, to join a real estate investment group or to buy shares in a real estate investment trust (REIT). Buying rental property can usually provide steady, reliable income if you find the right tenants. However, there are also expenses like property taxes and general upkeep that can limit profits, as well as huge investments of time and effort.

Real estate investment groups offer a more hands-off, low-risk method of investing in real estate. A group of individual investors contributes money to a company that purchases a property (usually something like a condo development). The company manages the property in exchange for a portion of the monthly rent [source: Beattie]. Another option is the real estate investment trust (REIT). They provide extremely accessible ways for individuals to invest in real estate. An REIT is a group that invests in various real estate properties, and receives preferential tax treatment from the IRS in exchange for paying most of its income to shareholders [source: U.S. Securities and Exchange Commission]. Investors can purchase shares of REITs on public exchanges, making them one of the more liquid alternative investments. Another upside is that, like stocks, shares in REITs pay out regular dividends [source: Beattie].

Finance Planning Tips

Here are some tips to help you with generating income and planning for the future.

Presented by United Way of Greater Atlanta Powered by SunTrust Foundation


More to Explore