New alternative investments

Alternatives investment are a great way to increase your income and diversify your portfolio.

I recently attended a meetup in downtown focused on new technology for alternative investments. The following companies were present:

  • Realtyshares
    • Crowdsourcing investment in real estate. You don't end up owning the real estate, but help finance real estate deals by providing loans.
  • CircleUp
    • Investment in venture for shares. You will own equity in companies.
  • Wunder Capital:
    • Loans to US companies to switch to solar.
  • Lending club: :
    • Unsecured loans to individuals.

Of these 4 companies, CircleUp is definitely the riskiest (but has the highest return as well).

They compare all returns for all of them (note that these are approximate returns):

  • Realtyshares: up to 14%
  • CircleUp: 40%
  • Wunder Capital: 8.5%
  • Lending club: 4-7%

Duration:

  • Realtyshares: 2-3 years
  • CircleUp: long
  • Wunder Capital: 7 years.
  • Lending club: 1.5 years

Why use alternative investments?

The main reason to invest in alternative assets is diversification. I also makes more sense to invest if you have a sizeable portfolio, since the risk is higher and the track record smaller.

Of these 4 companies, I only have invested in Lending club.

Lending club:

As an example, I've been a lending club investor for the last 5 years. Overall return were around 3.52% over ~1000 notes.

The 3.52% is not great you might say. But it is better than a savings account. However, I'm not so thrilled about my return. Perhaps, I wasn't so good at picking up notes. I now only use the automated system to select notes.

Here's the distribution of my notes over a long period of time. Interest rates have been going up recently, so you can see the bump on the left (for more recent notes).

Do you have any experience with new alternative investments? Feel free to share.