Over the last several years, the alternative investment space has been growing exponentially, offering retail investors unique possibilities for portfolio diversification and access to some markets previously only open to affluent investors. Whether it be art, farmland, real estate, or even pre-seed startups, there are now a number of platforms that let you in with as little as $100.
In this article, we take a look at some of the best places for a retail investor to get into alternative investments and outline the benefits that each offers, including opportunities in Fundrise, Masterworks, and FarmTogether.
*Note: None of these companies/links are affiliated. I do not receive any commission for mentioning them.
Masterworks: Investing in Art
Masterworks is a platform that allows investors to buy shares in fine art. The art investment market used to be an exclusive domain for those who could put millions into the acquisition of a single, high-value art piece. Masterworks changes this, expanding possibilities for fractional ownership in top-art pieces by artists like Picasso, Basquiat, and Warhol.
Benefits for Retail Investors:
Low Correlation to Stocks: Art tends to be uncorrelated with traditional markets, therefore providing a strong hedge against the volatility of the stock market.
Long-Term Value Appreciation: Historically, art has appreciated in value over time and thus can be a profitable investment if properly managed.
Benefits
Diversification: Art as an asset class canât be constrained by interest-rate linkages or even market cycles.
Transparency: The valuation is pretty transparent, and most of the reports on the same are well documented on reputable sites; hence, decisions can be well judged by the investors.
In terms of returns, art has shown steady profits in recent years, drawing a lot of attention from regular investors. The worldwide art market has recovered well, with total sales hitting over $67 billion in 2022, up from $50 billion in 2020, according to the Artprice 2023 Global Art Market Report.
Modern art has been a big reason for this, with its market index going up about 15% since 2020. Pieces by the top 100 artists have also shown an average yearly return of around 7% over the last ten years. Sites such as Masterworks make it possible for regular investors to purchase shares in valuable artworks, democratizing the ownership of high-value art pieces and further feeding the trend. Digital art and NFTs are on the rise. NFT sales surpassed $2 billion in 2021, alluring new investors to try new ways of tapping into the art market. All these changes prove that art is increasingly viewed as a good alternative investment, bringing steady returns and making it easier for more people to access a type of asset that used to be exclusive.
2. Fundrise: Real Estate for All
Fundrise is among the most popular ways for individual investors to access real estate investment opportunities through eREITs. Unlike direct real estate investing that generally requires significant sums of money, Fundrise pools money from investors to fund both commercial and residential projects around the country.
Reasons It Is Attractive to Retail Investors:
Low Minimum Investment: The ability to invest in real estate for only a few hundred bucks makes real estate more accessible with Fundrise. You can diversify across the property type since Fundrise has a portfolio of residential, commercial, and industrial. Passive Income Potential: With quarterly dividends, Fundrise carries the potential for generating passive income, alongside long-term capital appreciation.
Affordable Access: Traditionally, investment in real estate involves high initial capital outlays. Fundrise minimums are considerably lower, which opens access to retail investors.
Strong Track Record: Fundrise has a history of consistently strong returns for retail investors, often outperforming traditional real estate investments.
3. FarmRise: Invest in Farmland
Nature of the Platform: FarmRise is a unique avenue that allows investors to invest in farmland, the ultimate hedge against inflation. FarmRise bridges the gap for individual investors by offering them agricultural projects in crop production, livestock, and forestation.
Why This Appeals to Retail Investors:
Steady Passive Income: Farmland is an attractive long-term investment, combining stable income from agricultural produce with appreciation in land value.
Eco-Friendly Practices: FarmRise emphasizes sustainable farming methods to reduce environmental damage without giving up profitability.
Diversified Investment Opportunities: The platform offers conventional crop-growing farms and specialty agriculture, such as vineyards and organic farming.
Benefits:
Inflation Hedge: Farmland value generally rises during the course of inflationary times, so in many respects it actually provides an excellent hedge against that particular factor.
Predictable Returns: Compared with any other asset classes, investments in farmland can give fairly foreseeable returns owing to crop cycles and commodity pricing.
Ethical Investment: It enables retail investors, through sustainable farming practices, to make sustainable agriculture profitable while benefitting from an increased market with growing demand for eco-friendly production methods.
4. Angel Investing for Retail Investors
There are numerous crowdfunding platforms that allow ordinary investors to invest in pre-seed and early-stage startups. This allows investors to get involved with new venturesâââbe it in the area of technology advancement, consumer goods, or healthcare innovation.
Why Itâs Great for the Retail Investor:
It allows people to get in on the ground floor of growing startups, sometimes before they become household names. It affords one the chance to find and invest in the next generation of startups. In return for funding, the investors receive shares in the startups they fund.
Significant Upside Potential: Early-stage investments can yield huge returns if the company either grows fast or gets acquired.
Collective Support: Investing on a platform with like-minded investors gives one increased confidence in their investment decisions, for there is always a pool of investors supporting the same entrepreneurial business.
5. Crowdfunding for Commercial Real Estate
There are several crowdfunding real estate investment platforms that offer investments in debt or equity in property. You get to invest as little as $1,000 in large commercial real estate development cases: from apartment complexes and office buildings to retail centers.
Diversified Real Estate Opportunities: It involves investment opportunities along the spectrum of commercial properties located across diversified markets, from metropolitan cities to suburban areas.
 Either equity investmentsâââwhere you share in the profitsâââor debt investmentsâââwhere interest is earnedâââare possible.
Investor Control: The investors can choose a specific project to invest in and thus exert more control over where their investments go.
Benefits:
Transparency: These platforms can offer in-depth property analysis, projections of financial performance, and real-time updates during the investment process.
Tax Benefits: Investments in commercial real estate come with certain tax deductions, like depreciation.
Alternative investment options as art, agricultural land, real estate, or early-stage ventures are no longer in the exclusive domain of the wealthiest investors. Platforms like Masterworks, Fundrise, FarmRise, to name a few, provide access to those asset classes with relatively modest capital outlays.
The key potential benefits associated with this kind of access include diversification, passive income generation, and potentially high returns.
The dynamic nature of investment opportunities means that alternative investments are a unique way to build wealth other than through traditional equity and bond markets. Whether one is a seasoned investor or a first-timer, these platforms give access to an innovative and easy way to diversify a portfolio and improve financial outcomes.