Best Alternative Investments During Periods of High Inflation

Inflation comes with plenty of obvious pain points. The cost of everything is going up, your dollar is worth less, and it feels like there is no end in sight. You’re forced to make adjustments in your day to day life, as well as in your long-term planning.

When it comes to investing, how can you best mitigate the short-term effects associated with inflation and maintain your long-term projections? These three alternative investments may not be the cure-all, but they are battle-tested, against-the-grain moves that can do a good job of keeping your long-term goals realistic.

Real Estate

There is a finite amount of land in the world, and it’s going to continue to be in demand. Inflation or not, savvy investors keep real estate in their minds and in their portfolios. Depending on market conditions, you adapt as you see fit. Periods of high inflation may be the perfect time to move from real estate as an inclusionary diversification piece to being real estate heavy.

During the last recession, spanning from roughly December 2007 to June 2009, the average home in Ann Arbor, Michigan, sold for about $211,000, according to mlive.com. Ann Arbor is one of the most diverse, affluent and best places to live in America, as explained by Niche. As of June 2022, the average home sale price in Ann Arbor was $439,000. 

Buying in a recession and during inflation can be a profitable endeavor. It means taking a (relatively safe) gamble with a lot of money at a time when money is scarce. However, even if you aren’t backed by billionaires or have a spare down payment laying around, you can still find ways to accomplish your real estate dreams. Consider the following:

Arrived Homes: Arrived Homes is an alternative investment platform that allows individuals to easily invest in real estate by purchasing shares of rental properties. Investors on the platform earn passive income through the rental revenue while waiting for the properties they invest in to appreciate in value over time.

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Fundrise: Fundrise is a real estate investment platform designed to give retail investors access to institutional-quality real estate assets with flexible minimum investments. The platform's real estate funds are available to both accredited and non-accredited investors.

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Realtymogul: This unique online platform enables investors to handle the entire commercial real estate investing process right from their RealtyMogul dashboard. With rigorously vetted property listings, expertly managed REITs and a commitment to providing top-notch service and support to its members, RealtyMogul makes commercial real estate accessible to everyday investors.

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Wine and Spirits 

Fine wine has returned 10.6% per year over the last 30 years, outperforming the global equities market during that same span, according to Vinoest. An incredibly niche market with its own jargon and wealthy investors competing for rare collections might sound intimidating. However, you don’t need to be an expert to get started or even dive in the deep end. Consider a partner or platform that makes choices for you. Benzinga’s favorite example is:

Vint: Vint is an innovative fintech platform that introduces a new way for wine producers of all sizes to manage cash flows and grow their business with non-dilutive capital. The first SEC-qualified and fully transparent platform for wine and spirits collection investing, it has also launched the first-of-its-kind opportunity to invest in wine futures. Vint's first "Vint En Primeur" offering will be 50 cases of the 2021 Joy Fantastic Syrah from Santa Barbara. These wines are currently maturing in-barrel and will be bottled and released in 2023.

Another bonus is that this investment is less complicated than crypto, credit derivatives or NFTs. The Vint team curates collections of blue chips and up-and-coming investment-grade assets, and when the timing is right to maximize returns, it works with its merchant partners, auction houses and private buyers to sell assets within each collection and distribute proceeds on a pro-rata basis. .

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Art 

Art as an investment has been widely broadcasted, published and flaunted by the rich for a long time. Art ownership is a status symbol, to be sure, but it’s also a means for smart investors to mitigate risk. Artsy.net has explained “While an exact correlation between the art market and inflation is difficult to parse, as art is a sentiment-driven asset tied to surplus wealth, history suggests that the price of art sold at auction does tend to increase during periods of high inflation.”

Similar to fine wines, fine art is a culture unto its own. The landscape can be tough to navigate for beginners and there are millions of pieces to sift through. How do you know which pieces to invest in and buy? Platforms exist that essentially work as a fractional ownership art gallery, curating their own collections in which you have the opportunity to invest. 

Masterworks: Masterworks is an alternative investment platform that allows investors to own shares of famous works of art. Artwork is held in a climate-controlled, secure environment while Masterworks searches for an independent collector or buyer to sell at a profit. When a piece is sold, investors receive a share of the profits proportional to their initial investment. With a nearly 16% historical return, you may be able to be part of an opportunity to out-pace traditional markets.

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