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4 Alternative Investment Vehicles to Consider in 2021

When people talk about investments, many immediately think about buying stocks, bonds, or foreign exchange. Some might consider buying real estate properties, jewelry, or even luxury items.

But not all investments require you to trade through a broker or a bourse. Alternative investment opportunities have been gaining popularity recently. Some of them can make you a lot of money, while others are enough to give you a modest profit. In any case, they’re legitimate investment vehicles that offer great opportunities to grow your money without too big a risk.

Below are four alternative investment options to consider in 2021.

Pharmaceutical Stocks

Pharmaceutical companies are one of the best places to put your money today. Biotech has always been a huge market, offering enormous opportunities for long-term investors. But the coronavirus pandemic has drawn even more attention to pharmaceutical companies that are developing vaccines and therapeutic drugs.

If the pharmaceutical industry manages to subdue the COVID-19 epidemic in 2021, public companies and investors involved in the effort will be handsomely rewarded. Some obvious lucrative winners are Moderna (MRNA) and Pfizer (PFE), both leading vaccine developers during the pandemic.

There are less obvious pharmaceutical stocks, but they’ll just be profitable as the vaccine makers. For example, distributing vaccines will require a tremendous effort in terms of logistics. Therefore, third-party companies that will store, transport, and distribute the vaccines will also make excellent investment vehicles in 2021.

Oil and Gas Exploration

The demand for oil is expected to accelerate in the second half of 2021, which is bound to pull shares in energy companies along with it. Long-term investments in oil and gas can be highly profitable. Plus, oil and gas stocks serve as effective portfolio diversifiers.

However, investors should understand the risks before investing in oil and gas. The industry is highly volatile. Oil and gas stocks are susceptible to changes in supply and demand, so they pose a huge risk for investors. There’s also the possibility of oil spills. Accidents during the production of oil and natural gas, which can cause a company’s share price to go into free fall.

As with many other industries, the best oil companies to invest in are the long-established corporations. The larger the company is, the safer it’s likely to be. Look for those with global operations and annual revenues of more than $100 billion — ones that aren’t likely to go out of business soon.

Real Estate Investment Trusts

Real estate investment trusts (REIT) own, operate or finance real estate properties built to generate income. REITs provide an easy way for people to invest in real estate without buying the property themselves. Instead, you buy into a trust to fund a real estate project with other investors.

Most REITs are publicly traded like stocks, which means they’re highly liquid. Unlike physical real estate properties, you can easily sell your REIT shares and pull out of the investment whenever you want.

The downside to REITs is that they offer little in terms of capital appreciation. It’s the perfect investment vehicle if you want a steady income stream, but not if you’re looking to grow your money.

Gold

Gold is still one of the best inflation hedges in 2021. This tangible asset maintains its value and sometimes appreciates even as inflation rates increase, protecting investors from declining purchasing power of money.

Apart from being a great inflation hedge, gold assets are also excellent portfolio diversifiers. They have a low correlation with other asset classes, especially stocks.

There are multiple ways to own gold assets. You can buy physical gold in the form of bars or coins, purchase shares in gold exchange-traded funds, or invest in gold mining stocks or futures.

Research each investment vehicle and asset class thoroughly before putting your money in them. Look at the risk level of each investment opportunity to gauge if it matches your appetite. But don’t forget to diversify your portfolio. Remember that the higher the risk, the greater the potential rewards.

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