Table of Contents
Introduction
When it comes to discussing investment, the first things that come to people’s minds are the conventional products such as stocks, bonds, and real estate. But there is so much more out there – so many specific areas of the market that are simply waiting to be discovered by intelligent investors. Some of these less prominent markets can provide higher returns and help to increase the overall portfolio diversity. In this article, we will try to explore some of these markets and explain why you should consider including them in your investment portfolio.
1. Art and Collectibles
Investing in art and collectibles has been considered as alternative investment and it is becoming popular day by day. In fact, the Knight Frank Luxury Investment Index indicated that the value of rare collectibles has risen by 175% over the past 10 years which is far better than other assets. Investing in art can be a source of both profit and enjoyment.
For instance, consider the superb price growth of artworks in recent years. For instance, Leonardo da Vinci’s Salvator Mundi set a record $450 million price when it was sold in 2017. This is a clear illustration of the potential that the art market holds. Also, collectibles such as old coins, stamps, and cars open up new possibilities for diversification of investments.
2. Cryptocurrencies
Cryptocurrencies like Bitcoin and Ethereum have become popular in the last few years. Although they are volatile and risky, these digital assets can provide exciting trade possibilities for persons interested in high-risk high-return trades. In fact, in 2021, the total market capitalization of the cryptocurrency market reached $2 trillion, which shows that this area is gradually gaining popularity.
Investing in cryptocurrencies can also be used to reduce the risks of the traditional assets in the portfolio. For instance, when the COVID-19 outbreak hit the world, the stock markets of the world declined but the value of Bitcoin and other cryptocurrencies increased. However, it is still advisable to know more about the crypto market and its features.
3. Impact Investing
Impact investing is a unique strategy that can attract investors who want to make a social and environmental change while achieving financial gains. This strategy is estimated to be worth about $715 billion by the Global Impact Investing Network.
It is possible to invest in impact-focused funds or companies and at the same time make a positive change in the world. Imagine renewable energy, affordable homes, and microfinance – all of them are the great ways to make the world a better place and get a potential return on investment.
4. Peer-to-Peer Lending
Peer-to-peer lending platforms have changed the way of lending and receiving loans and it is now possible to skip the middleman and deal directly with the borrower and the lender. This market segment allows investors to receive high returns on their investments by providing loans to other people or companies.
These platforms also provide diversification since investors can invest their money across many borrowers. Usually, they offer higher interest rates than normal savings accounts or government bonds. But it is important to check the credit history of the clients and do not put all the money into one client.
5. Emerging Markets
Although they are not always classified as niche markets, emerging markets can be considered as investment areas that are not fully covered by developed markets. There are a lot of opportunities for growth and return in the new markets, for example, Brazil, India or China.
Investing in emerging markets can help to increase the diversification of your investment portfolio. For instance, in the financial crisis of 2008 these markets experienced much lesser declines than the developed markets. However, it is crucial to consider the political and economic risks of such investments.
Conclusion
There are numerous strategic positions in the market that are not conventional and can provide amazing investment opportunities. From art and collectibles, cryptocurrencies, impact investing, P2P lending, or emerging markets, there are many strategies to increase the diversification and return of your portfolio. Nevertheless, this process needs a lot of analysis, the views of professionals, and risk management. This is because niche markets require a lot of patience and a long-term approach. So, get ready to expand your knowledge and discover the exciting opportunities waiting for you in niche markets!
