According to a 2022 report by the Chartered Alternative Investment Analyst (CAIA) Association, alternative assets made up 12%, or $18 trillion, of the $153 trillion in global investable assets at the end of 2020. Growth in this asset classes is expected to accelerate rapidly in the coming years, reaching 18% to 24% of the global investable market by 2025.
What exactly are alternative investments and how do you add them to your portfolio? Here’s what constitutes an alternative asset, how you can invest and which platforms you should try if you want to diversify your portfolio with this burgeoning asset class.
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- Invest in alternative assets like real estate and art
- Invest in commercial real estate via REITs or equity stakes
- Invest across multiple asset classes with Yieldstreet’s Prism Fund, which is open to all investors
What is an alternative investment?
An alternative investment is an investment in any asset class other than conventional categories, such as stocks, bonds, mutual funds and cash. These can include but aren’t limited to:
- Hedge funds
- Private equity
- Real estate
- Fine art
- Wine
- Precious metals, such as gold, silver and platinum
- Cryptocurrency
- Private lending
Basically, if it isn’t stocks, bonds or any other traditional asset and you can invest in it, it’s an alternative investment.
What Matt thinks about real estate investing
REITs are a great way to diversify a portfolio outside traditional investments and can be attractive for their competitive dividends and long-term capital appreciation. REITs let anyone invest in large-scale, income-producing real estate, and they've been a favorite among investors looking for a steady stream of income for decades.
— Matt Miczulski, Editor, Investments.
How to invest in alternative assets
It’s now easier than ever to invest in alternative assets, and new markets emerge regularly. Technological advancements have spurred not only the popularity of alternative investments but also the accessibility, giving everyday investors access to new markets and potentially profitable investment opportunities that used to be out of reach.
Retirement-minded investors can consider self-directed individual retirement accounts (IRAs) as a way to invest in alternative assets. These IRAs are specifically designed to accommodate assets not typically permitted by most traditional IRA custodians.
But perhaps the easiest way to invest in alternative assets nowadays is through any of the numerous online platforms that connect investors with these types of assets. Here are some of those platforms, what they do and how you can use them to build out your portfolio.
6 alternative investment platforms
Investors interested in adding alternative assets to their portfolios should consider the following alternative investment platforms.
- Public.com
- Masterworks
- Fundrise
- Kalshi
- Vinovest
- Yieldstreet
1. Invest in a variety of alternative assets: Public.com
Public.com
4.3
★★★★★
Finder score
Public.com a beginner-friendly investing platform that's been growing its lineup of alternative assets. Alongside stocks, ETFs, crypto and Treasury Bills, Public.com offers art, collectibles, NFTs, luxury goods and more. Invest in shares of these alternative assets just like stocks in a company. But while Public.com offers commission-free trading for stocks and ETFs, it charges a 2.5% commission to buy and sell alternative assets.
Notable assets that are currently offered through Public.com include: Police Car by street artist Banksy from 2003, Tom Brady's rookie card and Shattered Backboard Air Jordans, signed and worn by Michael Jordan during one of his iconic moments on court in 1985.
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Pros
See AlsoThe 9 Best Investment Platforms for Accredited Investors - Stock AnalysisHow to Create an Investment Platform: Ultimate Guide for 202411 Best Investment Platforms in the UK Compared for 20249 Tips on how to choose an investment platform | Stake- Invest in art, collectibles, luxury goods and more
- Buy shares in alternative assets just as you would stocks
- Buy IPO shares or trade on the secondary market
Cons
- 2.5% per-transaction commission fee
- Limited research tools
- Limited account types
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Available asset types Stocks, ETFs, Cryptocurrency, Art, Treasury Bills, Collectibles Annual fee 0% Minimum deposit $0 Signup bonus N/A Cash sweep APY 5.1% Cash sweep insured FDIC Cash sweep insurance amount $5 million or $250,000 per program bank
| Stock trade fee | $0 |
|---|---|
| Minimum deposit | $0 |
| Cash sweep APY | 5.1% |
| Signup bonus | N/A |
2. Invest in art: Masterworks
Masterworks
3.6
★★★★★
Finder score
Before Masterworks came along in 2018, fine art investing wasn't very accessible. The hefty price tag of iconic, multi-million dollar artworks yielded a high barrier to entry, limiting access to only very few people. According to a 2021 report by Art Basel & UBS, works that sold for more than $1 million accounted for 64% by value in 2020, despite only accounting for around 1% of all transactions. In other words, high-priced paintings have been largely inaccessible to the masses. Masterworks allows the everyday investor to include these types of fine art as a part of their portfolio.
Through Masterworks, you can invest in securitized blue-chip artworks for as little as $20. You can then hold the artwork for any potential sale or, if there's demand, trade your shares on the secondary market. Any potential profit from an eventual sale of the painting will be some years down the road. According to Masterworks, they hold the painting for between three and 10 years before selling. Masterworks also charges a 1.5% annual fee, takes a 20% cut of the proceeds when they sell the painting and requires a minimum of $15,000 to open an account.
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Pros
- Access to blue-chip art investing
- Low minimum investments
- No transaction fees
Cons
- 1.5% annual management fee
- Masterworks takes 20% of the profits when a painting sells
- $15,000 needed to open an account
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Available asset types Art Annual fee 1.5% Minimum deposit $15,000 Signup bonus N/A
| Minimum deposit | $15,000 |
|---|---|
| Signup bonus | N/A |
3. Invest in real estate: Fundrise
Fundrise
3.7
★★★★★
Finder score
Founded in 2012, Fundrise is widely regarded as the first company to successfully crowdfund real estate investing. In doing so, the company essentially opened the door to real estate investing to the everyday investor. Fundrise has since added private credit and venture capital opportunities to its lineup of available investments.
Fundrise users invest in private real estate investment trusts (REITs) for as little as $10. Expect a holding period of at least five years, though you can sell early for a flat 1% fee. Fundrise charges a 0.15% annual advisory fee, and its real estate funds have an annual 0.85% flat management fee. Meanwhile, Fundrise's Innovation Fund, which invests in a diversified portfolio of private high-growth technology companies, has annual management fee of 1.85%.
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Pros
- $10 investment minimum
- IRA accounts available
- Private real estate, private equity and venture capital opportunities
Cons
- 1% early liquidation fee
- 0.15 annual advisory fee and 0.85% management fee for real estate funds
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Available asset types Real estate, Private credit, Venture capital Annual fee 1% Minimum deposit $10 Signup bonus N/A
| Minimum deposit | $10 |
|---|---|
| Signup bonus | N/A |
4. Invest in event contracts: Kalshi
Kalshi
Kalshi is an exchange that lets investors trade event contracts, which are derivative contracts that let investors trade on specified events. They can include everything from the amount of rainfall on a particular day to international affairs, to the winner of an Academy Award.
Kalshi's event contracts are structured as Yes or No questions, each with a yes price and no price that can range from $0.01 to $0.99. Once the outcome of the event has been determined, Kalshi pays out $1 for each correct contract. Beyond the payout from a correct contract, investors can use Kalshi to potentially hedge their portfolios. For instance, an investor heavily invested in oil stocks could purchase an event contract that pays out if the price of oil declines. If oil prices fall, so too may their oil stocks, but the investor can potentially limit this loss with the proceeds from their correct contract.
While event contracts aren't anything new, Kalshi is the first platform regulated by the Commodity Futures Trading Commission (CFTC), so investors can rest assured that the platform is legit. Kalshi makes money by charging a transaction fee on the expected earnings on the contract.
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Pros
- Regulated by the CFTC
- Relatively low fees
- Low minimum investments
Cons
- $2 fee to withdrawal money to your bank account
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Available asset types Event contracts Annual fee 0% Minimum deposit $0 Signup bonus N/A
| Minimum deposit | $0 |
|---|---|
| Signup bonus | N/A |
5. Invest in wine: Vinovest
Vinovest
3.3
★★★★★
Finder score
Founded in 2019, Vinovest offers investors a convenient way to include fine wine as a part of their portfolios. With Vinovest, investors have direct ownership of the wine in their portfolio, and they can buy, sell or even enjoy the bottles of wine themselves.
Vinovest offers four investment tiers, with minimum investment amounts ranging from $0 to $250,000. Annual management fees range from 1.90% to 2.50% depending on your chosen tier. Vinovest also charges a 2.5% buy-side trading fee, a 1% sell-side trading fee and a 1.5% yearly storage fee, billed monthly. While bottles can be bought and sold at any time, Vinovest notes that most investment-grade wines take 10 to 15 years to mature, which makes Vinovest most suitable for long-term investors.
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Pros
- Wine is insured and stored on your behalf
- Flexible investment minimums
- 100% ownership of wine
Cons
- Fees are relatively high
- Investment maturity usually takes 10 to 15 years
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Available asset types Wine, Whiskey Annual fee 2.5% Minimum deposit $1,000 Signup bonus N/A
| Minimum deposit | $1,000 |
|---|---|
| Signup bonus | N/A |
6. Invest in a variety of alternative assets: Yieldstreet
Yieldstreet
3.5
★★★★★
Finder score
Yieldstreet is a one-stop shop for investing in alternative assets, with one of the broadest selections of alternative asset classes on this list. Its offerings include:
- Real estate
- Venture capital
- Private equity and private credit
- Crypto
- Short-term notes and structures notes
- Transportation
- Art
- Legal finance
But some assets are only open to accredited investors, and Yieldstreet requires a minimum investment of at least $10,000. It also charges an annual management fee from 0% to 2.5% depending on the asset.
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Pros
- Invest in a variety of asset classes including art, real estate and commercial offerings
- The Prism Fund is available to non-accredited investors
Cons
- Most offerings are only available to accredited investors
- $10,000 minimum investment
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Available asset types Real estate, Art, Other Annual fee 1% Minimum deposit $10,000 Signup bonus N/A
| Minimum deposit | $10,000 |
|---|---|
| Signup bonus | N/A |
How we chose these platforms
Access to alternative investments has been picking up in recent years, but options are still limited for some assets. As such, some platforms included in this article are the only platforms currently available for that given asset.
Where available, we also looked at customer reviews. Our overall aim was to give investors a diverse list of alternative investment platforms that are also generally well-received among customers.
Advantages of alternative investments
Alternative investments can be particularly advantageous because of their low correlation to stocks and bonds, especially in markets where these conventional investments are underperforming. That’s what Terri Spath, certified financial analyst, certified financial planner and founder of investment advisory firm Zuma Wealth said about the benefits of adding alternative investments to a portfolio.
“The biggest benefit of alternative investments comes from their low correlation to stocks and to bonds,” Spath said. “With stocks bleeding the profits from portfolios and bonds like dead money thanks to inflation and interest rates, alternatives are where we are putting a lot of client money.”
While alternative assets can help reduce a portfolio’s market risk, they can also give investors exposure to potentially lucrative investments.
“Alternative investments are often attractive from both a risk perspective and a return perspective,” says Robert R. Johnson, a professor of finance in the Heider College of Business at Creighton University. “From a risk standpoint, alternative investments are often viewed as good diversification vehicles … Alternative investments are also often attractive from solely a return standpoint, because the returns from asset classes such as venture capital and hedge funds can … be greater than the returns from the more traditional classes.”
Here are some of the main advantages of alternative investments.
- Diversification. With their low correlation to conventional investments, alternative assets can help diversify your portfolio, reduce market risk and maximize your overall returns.
- Potential for bigger returns. Though they may be riskier, returns from alternative investments such as venture capital and hedge funds can also be greater than the returns from the more traditional asset classes.
- Interesting and exciting investment opportunities. From vintage cars and real estate to investing in crypto or the next big startup, alternative investments can add some flair to a portfolio for investors who aren’t with just stocks and bonds.
Risks of alternative investments
Alternative investments are generally more complex than traditional investments. They can also have higher fees associated with them and many aren’t regulated by the SEC, which means investors need to spend more time doing their homework and understanding the potential risks involved.
They’re also known for being relatively illiquid compared to traditional investments, which means investors should expect to have their money tied up for a longer period.
“One of the biggest problems with many alternative investments is a lack of liquidity,” says Johnson. “Other assets, like commercial and residential real estate have significant transaction costs and can be converted into cash over a longer period and with greater price uncertainty. This is an aspect of many alternative investments that the purveyors of those investments often times gloss over.”
So while alternative assets provide investors with a great diversification tool and the potential for a higher return, investors need to be aware of the unique risks associated with these investments.
These are some of the biggest risks of investing in alternative assets.
- Lack of regulation. Many alternative assets aren’t regulated by the SEC, which means they don’t have the same safeguards as traditional investments. This can lead to an increase in fraud, especially if the investment is complex.
- May be highly illiquid. Some alternative assets lack a secondary trading market or tend to be illiquid because of their complexity and difficulty in valuing them. Others have lock-up periods that prohibit investors from accessing their money, should they need to sell. With some alternatives, it could be years before you can sell out and liquidate the asset.
- Can be highly volatile with large variations in returns. There are no guarantees in any investment, but alternative assets can be especially volatile and produce large variations to the returns.
Compare alternative investment platforms
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Bottom line
Because of their low correlation to traditional assets, alternative investment can be a diversification option for investors. But consider your time commitment and your tolerance for risk before jumping in. Investors should always understand what they’re investing in and the associated risks. This is especially true with alternative assets due to their increased complexity and lack of federal regulations.
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Finder is not an adviser or brokerage service. Information on this page is for educational purposes only and not a recommendation to invest with any one company, trade specific stocks or fund specific investments. All editorial opinions are our own.
Frequently asked questions
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An alternative investment platform is any investment platform that offers access to alternative assets.
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Four examples of alternative investments include real estate, artwork, precious metals and investment-grade wine.
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The best alternatives to the stock market may be assets that do well when stocks underperform. This can include bonds, which tend to move in the opposite direction of stocks, and real estate, which has no correlation to the stock market.
