Did you know that some alternative investments don’t follow the stock market? That’s great for diversifying your portfolio and insulating against downturns. With COVID-19 casting its shadow, this is something on every investor’s mind.
When I started researching opportunities that don’t follow the public market, I was surprised to discover these five opportunities. I was looking for “responsible, recession-resistant” options and found the “fun asset class.” Had I known I could be studying art, wine and music while in quarantine, I would have started earlier just for the sheer enjoyment of it! Definitely interesting. Without further rambling, here we go.
In this article I’m going to cover 5 crowdfunding investment platforms that offer alternative assets that are uncorrelated to the public market.
- Masterworks – fine art
- Rally Rd. – cars and collectibles
- VinoVest – fine wine
- Royalty Exchange – intellectual property, primarily music
- Fig – video games
Note: All of these investment opportunities come with risk so do your due diligence and get educated before diving in.
Table of Contents
Invest in Fine Art with Masterworks
Ever dream of owning a Monet? Is the idea of studying Warhol and Basquiat more interesting than learning about stocks and bonds? If so, consider masterworks.io. This investment platform lets virtually anyone purchase fractional shares in fine art.
Masterworks’ unique investing method lets ”every day investors” access an asset class formerly reserved for the ultra wealthy. Here is how it works.
First, Masterworks buys “blue-chip” artwork from auctions and established galleries. Blue-chip artwork refers to paintings by the top 100 artists according to sales volume. Next, Masterworks registers the artwork as entities with the SEC and offers shares of Class A stock for it. Then Masterworks posts the art online for your investing pleasure.
Paintings are either professionally stored in Delaware Freeport, a museum quality art storage facility, or displayed in the Masterworks gallery in Manhattan, NY. As a unique bonus perk, investors can view the artwork in the members-only gallery located in NY’s SoHo neighborhood.
If and when a painting is sold to a private collector, the investors get their share of the net proceeds.
These investments are highly illiquid and the investment model is new so it’s not exactly “proven.” The company also requires an interview before you can invest. But hey, maybe it’s worth the risk and the hassle. According to Masterworks, not only does art not follow the stock market, blue-chip artwork outperformed the S&P 500 by more that 250% since 2000.
For a deep dive on investing in art and art market returns, check out Masterworks Insights where you can read articles, research and reports.
Invest in Luxury Cars with Rally Rd.
You could say Rally Rd. is like the stock market for collector cars (and other collectibles). Curating a collection of cars that are likely to appreciate means those cars must be special. They get high scores for rarity, originality, value and history, to say the least.
The company sources collectible assets and turns them into equity shares. All assets are stored in a secure, climate controlled facility on the east coast.
After a 90 day hold period, investors can sell their shares to other Rally Rd. members during monthly trading windows on the Rally Rd. app. Or they can get paid out when/if an asset is sold.
There are all kinds of interesting items on the app. A 1999 Shelby Series 1. Winston Churchill’s six volume series “The Second World War,” (signed first edition), which helped earn him a Nobel Price in 1953. An original copy of the 1984 Teenage Mutant Ninja Turtles #1 comic book. Lots of premium handbags, watches, sports memorabilia and fine spirits too. Fun user experience to boot!
Check out the Rally Rd. site, download the app and browse the collectibles.
Invest in Wine with Vinovest
Vinovest is another online platform that makes an asset class formerly reserved for the ultra-wealthy, available to a wide range of investors. This time it’s for fine wine.
Through Vinovest you can purchase a portfolio of wine for as low as $1000. The company taps into an extensive network of wineries, global wine exchanges and merchants to identify wines that will meet your investing goals. They handle all sourcing and authenticating, along with storage and insurance. And, yes, investors can request bottles from their portfolio to be shipped home to try themselves.
Not only does wine not follow the stock market, Fine wine seems to be recession resistant. For instance, during Q1 of this year, the S&P 500 plummeted but wine prices went up 1.1%. Vinovest says “wine has outperformed the S&P for the last 30 years, including during downturns.”
Unique side perk; the company hosts wine events where investors can connect to others in the Vinovest community and enjoy tastings with Master Sommeliers.
Liquid assets, literally. To learn more about Vinovest, visit their site.
Invest in Performance Royalties with Royalty Exchange
Royalty Exchange is an online auction platform, specializing in intellectual property, primarily music.
Terms and costs vary and intellectual property can be complex so there is much to sift through – it’s not a quick hit investment option. However the complexity may be outweighed by the upside potential.
Over last 15 years or so, the music industry navigated disruption on all sides: piracy, going from physical albums to digital singles, and undervaluation from a lack of transparency. Things started turning around in 2015 thanks to digital streaming from services like Spotify, Apple, and Pandora. Game changer for the hurting music industry.
Streaming went from about $2.8 billion in 2016 to 11.4 in 2019 according two IFPI. Consumers are signing up for subscriptions all the time. Just think of how many people have a portable music player in their pocket! It’s convenient. It’s inexpensive (for the cost of a CD you can get access to endless new music for a month). And it’s growing. Goldman Sachs predicts that music revenue will grow to about $131 billion by 2030, 37B of that will be streaming platforms.
The consumption of music drives royalty payments. Music is a passion, a pastime and entertainment. And music consumption is not affected by increasing interest rates or the stock market volatility. And all signs are pointing to this as a growth market. Worth checking out!
Invest in Video Games with Fig
Publishing platform for video game investments
The fig.co platform is where “traditional” crowfunding meets investing. Investors can invest in a crowdfunding campaign for a reward (usually a sample, early edition of a product or some swag), just like with Kickstarter or Indiegogo. Investors can also invest in the performance of the game. Once the game enters the market, the more that sells, the more payback for the investor.
Fig brings investment and support from the gaming community together to help developers bring their games to market and returns to investors. Fig games have won numerous awards and they have seen buyout from industry giants like Microsoft. For 2019, the average return across all Fig Games was about 18%. Furthermore, Fig just joined Republic so you can expect lots of expansion on their offers in just about every way.
As a side-note, I can’t help but think of what a great opportunity this is for those of us with young gamers in the house. For the next holiday, skip the physical gift. Have your child (niece, nephew, whatever!) choose a game to invest in, follow its development and then have ownership in the game. This could be an engaging way to peel the kid off the smartphone for half a second to learn about money, investing and entrepreneurship. Maybe they get excited about game design and coding. That alone may be worth the investment. Maybe the extra video game screen time during quarantine will have an upside after-all.
Minx Tip: Having exposure to the creative world of art could draw in a new audience to the world of investment. In fact, that’s how my husband first got me excited about investing. However, if you don’t love the “artsy” feel of these opportunities, check out litigation finance. Legal funding is another alternative investment that doesn’t follow the stock market and tends to go up during downturns. We invested with LexShares and wrote an in-depth review of our experience, including a chat with CEO Jay Greensberg, a knowledgeable and overall really nice guy. You can read more about that in this article.
Alternative Investments for the Win
Investors are always looking for ways to protect their capital and maximize returns. Even more so today as we navigate COVID-19. Alternative investments are a great way to diversify and these 5 options are worth exploring since they are don’t follow the broader public market.
With these sites, you can browse and review investment opportunities, fund investments, monitor progress, and receive any returns entirely online. That makes it easy, and accessible for virtually anyone. At Money Minx we are working to take this up a level so you can view and track all of your investments, traditional and alternative, all in one place. Stay tuned for more on that.
In the meantime, we’ll be exploring more alternative investment options like the ones listed here. Are you looking into alternative investments during the COVID economy? Or waiting it out? How are you weathering this storm?