Best Alternative Investments for 2026 • Benzinga

Alternative investments are assets that fall outside traditional stocks, bonds, and cash, offering investors new ways to diversify and potentially boost returns. These investments can include real estate, private equity, hedge funds, commodities, cryptocurrencies, art, and collectibles. Unlike conventional markets, many alternatives are less correlated with stock performance, which makes them appealing for managing risk during economic uncertainty.

While they can provide opportunities for higher yields and portfolio protection, alternative investments often come with unique risks, lower liquidity, and more complex entry requirements. For investors seeking to broaden their strategies, exploring the best alternative investments can open doors to fresh growth and long-term wealth-building potential.

What are Alternative Investments?

Alternative investments are assets that don’t fit into traditional categories like stocks, bonds, or cash. They include things like real estate, private equity, hedge funds, commodities (gold, oil, etc.), cryptocurrencies, and even collectibles like art or rare wine. These investments often have higher risks but can offer big rewards and help diversify a portfolio.

Unlike stocks, they can be harder to buy and sell quickly, and they sometimes require specialized knowledge to invest in. They’re popular with wealthy investors and institutions looking for ways to grow their money beyond traditional markets.

9 Types of Alternative Investments to Consider

The range of alternative investments beyond the traditional asset classes is wide. The list below isn’t close to exhaustive, but it does represent the best alternative investments you can make right now.

Real Estate

Real estate is the largest investment asset in the world. Investing in real estate means you are buying land or a residential or commercial property. Alternatively, it can mean that you’re doing either of those through a real estate investment trust (REIT).

Buying residential or commercial real estate as an investment can provide you with cash flow through rental income. It can also appreciate over time, bringing you equity.

If you don’t want to collect rent and take care of a property, you can invest in a REIT. A REIT manager invests your money in different properties, manages them, collects rent, and shares the annual profits with you.

Like many alternative investments, real estate requires expertise and patience. You must do your research and understand your risks.

• Residential or commercial rental property: You buy a building and collect rent.
• Real estate investment trust: Your money is pooled through a REIT manager who buys properties, manages them, and shares the rent with you.
• Land: You can subdivide the land, develop it yourself, or let it appreciate.

An added benefit of real estate investing is that the market is far less volatile than stocks and bonds.

>>Invest in Real Estate: Arrived

Lending

Lending allows you to earn interest on what you loan and also earn your money back when the loan is paid off. Here are two types of lending used in alternative investing:

• Peer-to-peer lending (P2P): Done online without financial institutions, you can use this to select your borrower based on income, credit, and other factors, and typically charge a higher interest rate.
• Mortgage debt: You can buy defaulted mortgages at a discount and profit from the difference between what you paid and what is paid back, or lend to borrowers who want to buy or refinance.

Lending is an alternative investment that can give you high returns. However, this investment also has risks: default, fraud, and failure of online platforms.

>>Invest in Lending: Yieldstreet

Fine Art and Collectibles

Investing in fine art has typically been left to high-net-worth individuals. That said, famous paintings and other collectibles — rare coins, vintage cars, jewelry, wine, trading cards — are being bought and sold among retail investors.

Collectibles are a tangible investment and typically appreciate. However, to avoid being scammed, you need expertise, and you will find these investments harder to turn into cash if you have a financial need.

>>Invest in Fine Art: Masterworks

>>Invest in Collectibles: Public.com

Gold and Precious Metals

There are several ways to invest in gold and other precious metals, such as silver, platinum, and palladium. You can buy physical metal, such as bars, coins, or jewelry, or you can invest in gold exchange-traded funds (ETFs), gold mutual funds, mining stocks, or futures.

These securities track the price of the precious metal. They are more liquid than when you’re holding the physical metal. You can buy stock in companies that mine gold and silver for a higher return. However, mining company stocks come with a higher risk.

>>Invest in Gold and Precious Metals: American Alternative Assets

Commodities

If you’re investing in commodities, you’re trading raw resources and materials. Gold is a commodity, as are oil and natural gas.

You can buy futures contracts or gain access through ETFs. Commodities can be volatile, though. Thus, it’s important to think about how gasoline fluctuates because of oil prices. But commodities offer diversification and a hedge against inflation as the rise in price helps you.

>>Invest in Commodities: Plus500

Cryptocurrencies

If you have a tolerance for a volatile asset and are ready for virtual alternative investing, cryptocurrencies such as Bitcoin, Ethereum, Tether, Solana, Binance Coin and more might be for you. These digital or virtual currencies use a decentralized ledger known as Blockchain for security and transactions.

The price of cryptocurrencies has shot up as their popularity has grown. The price in May 2016 was $500. It traded at $45,800 on Jan. 2, 2024, according to Forbes. Ethereum is right behind Bitcoin, selling for $11 in April 2016 and $2,416 in January 2024.

These digital currencies don’t have much regulation, but governments are increasingly beginning to look at issues of consumer protection, financial stability, competitiveness, and financial inclusion.

>>Invest in Crypto: Gemini

Crowdfunding

Through an online platform, you can raise money from a large number of people for a business, project, or cause. This is known as crowdfunding, and it can allow you to invest your money in a way not available through traditional investing.

It can also be a great way to diversify your portfolio, earn a higher return, or impact your community. However, it also comes with high risk, such as fraud, lack of regulation, volatility, and illiquidity.

>>Invest in Crowdfunding: Fundrise

Private Equity

Private equity is a way for you to invest in companies whose stocks are not publicly traded. As an investor, private equity doesn’t just allow you to diversify your investments and earn a high return. It also provides you with an opportunity to influence a company’s management and strategy.

Illiquidity as well as higher risks and costs are the downsides. Thus, this kind of alternative investment is better left for investors who can weather high volatility and a long-term commitment of capital.

Hedge Funds

A hedge fund is an investment fund that trades assets that are relatively liquid. Hedge fund managers use different investment strategies — long-short equity, market neutral, and quantitative strategies — to attempt to earn a high return on their investments. Hedge funds are exclusively the dominion of institutional investors and high-net-worth individuals.

Understanding Alternative Investments

Once strictly the domain of institutional investors and high-net-worth people, the alternative investment industry has recently soared in popularity. Individual investors might have stayed away because some alternative investments are complex, and most are illiquid, which means they can’t be sold quickly to get cash.

According to the Chartered Alternative Investment Analyst Association (CAIA), alternative investments represented $18 trillion in assets under management (AUM) in 2020. In other words, they made up 12% of the $153 trillion global investment market that year.

PwC’s estimate of global AUM is lower, reaching $145.4 trillion by 2025. However, investments in alternative asset classes are expected to reach $21.1 trillion, or 15% of the market, by 2026.

Alternative investments are assets that aren’t traditional stocks, bonds, or cash. They include, but extend beyond, these assets:

• Real estate
• Lending
• Gold and precious metals
• Commodities
• Fine art and collectibles
• Cryptocurrencies
• Crowdfunding
• Private equity
• Hedge funds

The number of alternative investments has grown because investors want assets with lower correlations, which refers to how two securities move in relation to each other. This is desirable because interest rates have risen, and inflation has remained high.

A lower correlation also means that assets are less likely to move in the same direction if the economy dips. In addition, most alternative investments aren’t tied to traditional financial markets.

Find Your Alternative Investment and Diversify

When selecting alternative investments, it’s important to conduct thorough research and due diligence. Each alternative asset class comes with its own set of risks and rewards, so understanding how these investments fit into your overall financial goals is key.

By finding your alternative investment options and diversifying your portfolio, you can better protect your wealth against market downturns and capitalize on a broader range of investment opportunities. Working with a financial advisor or investment professional can help you navigate the complexities of alternative investments and tailor a strategy that aligns with your risk tolerance and objectives.

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