7 of the Best Ways to Invest That Don’t Involve Stocks

Happy investor
ambrozinio / Shutterstock.com

Trying to decide where to put your cash to work on your behalf can feel like a daunting task these days.

Bank account and CD rates are about as low as they can get. Meanwhile, the stock market is near historic highs, making it hard to get excited about buying new shares.

Depending on your interests, portfolio goals and risk tolerance, there are other investments that could potentially provide you with a return. Here are some of the best ways to invest that don’t involve stocks.

1. Real estate

Woman with a house and money
Asada Nami / Shutterstock.com

You can invest in real estate by purchasing a property or by investing in a real estate investment trust (REIT).

If you have the capital or can get a loan, buying a property and renting it out can be one way to receive regular cash flow and take advantage of potential appreciation. If you don’t want to be a landlord, REITs allow you real estate exposure without the hassles that come with managing a property.

Finally, there are platforms like Fundrise that allow you to invest in real estate projects with a relatively small amount of money.

2. Peer-to-peer lending

Small bags of money
Watchara Ritjan / Shutterstock.com

Another way to invest is to lend money to those who need it through peer-to-peer (P2P) lending. Lending Club shut down its P2P lending platform in 2020, but it’s still possible to lend out your capital to others with other platforms like Peerform and Prosper.

P2P lending comes with the promise of higher returns than might be earned elsewhere. However, be aware that the risk may be greater, too, and borrowers may be those with lower credit scores who don’t qualify for conventional loans.

3. Municipal bonds

Municipal bond
Vitalii Vodolazskyi / Shutterstock.com

Many investors like municipal bonds — issued through state and local governments — because the interest received generally isn’t taxed at the federal level. This can provide a stream of income for some investors. However, it’s important to note that it can still increase taxes on your Social Security benefits, as nontaxable interest is considered part of your combined income.

You can buy municipal bonds directly using a broker or a self-managed investment account. It’s also possible to find bond mutual funds and exchange-traded funds (ETFs) that focus on municipal bonds.

If you want more geographic diversity, you can get bonds from around the world, including emerging market bonds. These are also often available through mutual funds and ETFs.

4. Treasury bonds

Treasury bonds
Larry1235 / Shutterstock.com

If you want a relatively safe investment backed by the U.S. government, Treasury bonds are an option. You can purchase them at TreasuryDirect, deciding which maturities to get and which face values to choose.

For those concerned about inflation, Treasury Inflation Protected Securities (TIPS) are also available. These investments adjust regularly, keeping up with the inflation rate so you don’t end up losing out to rising prices.

In addition to buying bonds through the Treasury Department, it’s also possible to find index funds and index ETFs that focus on bonds, including TIPS. You can also buy Treasury bonds through your brokerage account in many cases.

5. Cryptocurrency

cryptocurrency bitcoin
Coyz0 / Shutterstock.com

For those that don’t mind a little speculation, it’s possible to earn a return on cryptocurrencies like Bitcoin, Ethereum and Litecoin. There are also lesser-known (and cheaper) tokens that can provide you with a chance to find the next big thing. It’s relatively easy to purchase crypto using an exchange like Coinbase or Gemini. These exchanges even provide you with a digital wallet to keep and manage your tokens.

Through a process called staking, you can also earn a return on some of your cryptocurrency holdings. If you’re willing to hold onto some coins, like Cosmos, you could earn about 10% in an annualized return. If you put in $1,000, you could receive close to $100 a year in Cosmos. When you stake, your yield is paid in additional tokens that you could sell later.

Realize, though, that crypto is volatile and prices fluctuate daily, so seeing consistent returns can be difficult. However, if you have some extra cash and you don’t mind speculating, it can be a way to see some returns.

6. Art and other collectibles

Porcelain doll, collectibles, fine art
DimaSid / Shutterstock.com

You can also invest in art and other collectibles. There’s no need to have millions of dollars, either. Platforms like Masterworks and Rally allow you to buy shares in valuable artwork and even classic cars and expensive sneakers.

For those who are interested in wine but don’t have the means to store and properly manage their bottles, Vinovest offers a chance to invest. Plus, with Vinovest, you can decide to have your investment shipped to you — so you can actually drink it.

7. Paying off debt

Woman destroys debt
Jason Salmon / Shutterstock.com

Finally, if you have cash sitting around, you could invest in yourself by paying off some of your debts, especially the high-interest ones. As Money Talks News founder Stacy Johnson has put it a million times, paying off debt with a 15% interest rate is like earning a 15% return, risk-free. Where else are you going to get returns like that?

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.