Great Non-Stock Investment Options for the Risk Averse

All investments incur some form of risk, but none quite as much as stocks. Given the volatility of stocks, some potential investors might be inherently averse to holding most of their assets in this format.

On the plus side, the stock market is not the only place to invest. There are, in fact, excellent alternative investment options that don’t involve getting your hands on penny stocks or shares.

If you are a young or a casual investor, you might prefer to hold assets that have long-term value. While some stocks do offer excellent benefits in the long term, there are better assets to consider. Here is a list of great investment options to consider that don’t directly involve owning or trading stock:

Real Estate

Owning actual property is a great investment for many reasons. While property can get devalued, you are holding on to a real asset. The values may go up in the future, or you can put the property to a different and more lucrative use, such as agriculture.

Real estate investments are not for everybody, of course. Young investors may find themselves priced out. However, if you are a homeowner, you can consider yourself already a property investor. You can start earning income off your home like a regular real estate investor by renting out parts of it. Rent a room, a couch, or the basement to earn passive income that will pay off the mortgage.


A bond, in simple terms, is a type of an IOU. It’s a type of security that long-term investors highly prefer. Bonds are issued by governments or corporations to raise money. The risk involved with bonds can actually vary, depending on where they originate from.

There are several types of bonds investors can consider: treasury bonds offered by national governments, municipal bonds issued by city or state governments, and corporate bonds issued to raise capital.  There are also foreign currency bonds issued overseas, perpetual bonds that have no redemption date, and zero coupon bonds that accrue interest over time.

Bonds are a type of debt the issuer owes you. All bonds are issued for a fixed time period, which can vary from 5 years to 30 or more. During this time, depending on the bond type, the bondholder receives interest payments. Interest may be paid annually, quarterly, and in some cases monthly. Zero coupon bonds don’t pay interest, but accrue value for a period and pay it all off at maturity, similar to a certificate of deposit.

Bonds are not subject to daily or weekly stock market fluctuations. Rather, the risk involved with bonds is assessed by other factors. For example, a bond issued by a stable government like Germany would be at less risk of default than a bond issued by a government in crisis like in Afghanistan.

Corporate bonds can be secured with an asset or be backed by an insurer that decreases the risk for the bondholder.  The riskiest corporate bonds are junk bonds, which generate high yields but can also default spectacularly as some did in 2008.

Acquiring a bond will require more investment money than a penny stock. But these can generate better yields at far less risk than stock.

Trading Commodities

Investing in important pieces of everyday life such as metals (gold, silver, or copper), energy (crude oil or natural gas), meat from livestock, and agricultural (corn, wheat, rice, or coffee) can be either short or long-term alternatives to stocks.

Love drinking wine? If you were to actually invest in wine, you would be able to earn returns as high as 15 percent. According to Reiss, wine investors can expect returns over 6 percent annually. A $100 bottle you buy now could be worth thousands in two or three decades when you retire. If you are already a wine enthusiast, you might be able to comfortably slip into the scene as an investor and is less cumbersome than calculating political risks for a treasury bond, for example.

If you have been reading about investing, you may have come across this word a lot: diversification. Any of the above assets are solid options to diversify an investment portfolio overrun by stock. If you want to enter the investment business, but without taking on stock-induced risk, consider any of the above options.

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