Key Takeaways
- • Alternative investments are defined as assets beyond traditional stocks, bonds, and cash, including real estate, commodities, cryptocurrencies, hedge funds, private equity, art, and wine, according to Investopedia.
- • Investopedia notes that alternatives offer diversification and potentially higher returns but carry higher risk, limited liquidity, and longer investment timelines.
- • Crowdfunding platforms such as Fundrise, Yieldstreet, Crowdstreet, and Masterworks have broadened access to alternatives that were previously limited to accredited investors.
- • Accredited investor thresholds cited include net worth above $1 million excluding primary residence, or income above $200,000 individually ($300,000 jointly) in each of the prior two years.
- • Investopedia cautions that some private alternative vehicles are not SEC regulated, can carry excessive fees and uncommon tax reporting, and may lock up capital for months or years.
Summary
Invopedia's guide, written by Barbara A. Friedberg and reviewed by Michael J Boyle and last updated March 19, 2026, is a consumer-oriented primer on alternative investing. It defines alternatives as assets outside traditional stocks, bonds, and cash, and lists gold and silver, art, wine, real estate, hedge funds, private equity, cryptocurrency, and private and distressed debt as common examples. The article attributes growing interest in alternatives to the 2008 recession, the stock market decline, and the mortgage market collapse, noting that these assets tend to attract investors during periods of heightened equity volatility and economic weakness.
The guide contrasts alternatives with equities. It cites a 9%-plus average annual return for the U.S. stock market over roughly a century, while acknowledging drawdowns such as the -18.01% decline in 2022 and the -36.55% crash in 2008. Average returns on alternatives are described as ranging from about 5.0% for a debt fund to double digits for some real estate partnerships and niche products. The article states that adding alternatives to a diversified stock and bond portfolio may reduce volatility and potentially enhance returns, while stressing that no outcomes are guaranteed.
On access, the guide explains that alternative ETFs and mutual funds require a brokerage account, while standalone platforms require identity verification and linked bank accounts. Minimum deposits range from about $10 to $20,000 or more, with examples including FarmTogether offerings starting at $15,000 and a Sustainable Farmland Fund requiring $100,000. Sample alternative ETFs cited include RSBT, TPMN, NOPE, RPAR, MRGR, BITO, and GSG. The article also flags risks, including that some private vehicles are not SEC regulated, that founders may lack the oversight expertise of regulated fund managers, and that many alternatives have long lock-up periods and illiquidity. Fees are described as potentially excessive, and the article notes that the best deals are often restricted to accredited investors.
Note that the article discloses that Investopedia may receive compensation for links and that it earns a commission for its Fundrise endorsement.
The guide contrasts alternatives with equities. It cites a 9%-plus average annual return for the U.S. stock market over roughly a century, while acknowledging drawdowns such as the -18.01% decline in 2022 and the -36.55% crash in 2008. Average returns on alternatives are described as ranging from about 5.0% for a debt fund to double digits for some real estate partnerships and niche products. The article states that adding alternatives to a diversified stock and bond portfolio may reduce volatility and potentially enhance returns, while stressing that no outcomes are guaranteed.
On access, the guide explains that alternative ETFs and mutual funds require a brokerage account, while standalone platforms require identity verification and linked bank accounts. Minimum deposits range from about $10 to $20,000 or more, with examples including FarmTogether offerings starting at $15,000 and a Sustainable Farmland Fund requiring $100,000. Sample alternative ETFs cited include RSBT, TPMN, NOPE, RPAR, MRGR, BITO, and GSG. The article also flags risks, including that some private vehicles are not SEC regulated, that founders may lack the oversight expertise of regulated fund managers, and that many alternatives have long lock-up periods and illiquidity. Fees are described as potentially excessive, and the article notes that the best deals are often restricted to accredited investors.
Note that the article discloses that Investopedia may receive compensation for links and that it earns a commission for its Fundrise endorsement.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.