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Alternative markets smart investors should consider


If you are an active investor then you probably are fairly comfortable with investing in the stock market but there are a series of alternate investment streams that you may find offer great value for the canny investor.

With most markets being available to retail investors and plenty of information out there about investment strategies, it makes sense to have a look at alternative possibilities.

A small health warning here though – these markets are for sophisticated investors and if you aren’t confident in your ability then please wait until you have completed your research before investing!

The Alternative Investment Market 

OK so this is a bit of a cheat because it is still a market that trades in shares on the London Stock Exchange, but as the name suggests the investment opportunities are different to those offered on the main market.

The Alternative Investment Market (AIM) features small and medium-sized companies that haven’t reached the size required for listing on the LSE.

The regulatory requirements are lighter and so it makes it more suitable for small, high-growth companies in new and emerging sectors.

There are investors who have made their careers by simply investing in the AIM as the returns can be significantly higher than other options but as you would expect, higher growth means higher risk.

Although we’ve looked at the London AIM there are alternative stock markets on almost every exchange around the world so if you have a particular favourite then have a look and see what alternative listing they operate.

Peer-to-Peer Lending

The peer-to-peer lending sector has come on leaps and bounds during the last few years and the range of types of lending has expanded massively.

Essentially this is a way of getting money from the investor to the borrower/company with little or no intermediary taking a cut.

Investments in this area can range from microloans to private individuals through platforms like Ratesetter to equity investments directly in the businesses using organisations like Funding Circle.

The investments tend to be safer than the stock market (as long as you diversify your portfolio) and outperforms most standard retail investment like deposit accounts.

Shout out to the charity sector too. There are a number of platforms that give microloans to people around the world to help them develop their businesses. Check out Kiva for example if you want to do some good.

Forex Trading

If you are looking for something that requires a much more active investor then foreign exchange trading could be the market for you.

The premise is simple, forex trading relies upon capitalising on movements (sometimes micro-movements) in exchange rates and then making your move.

There are a variety of indices to get involved in and successful day traders usually specialise in a basket of specific currencies so that they can build up a successful trading strategy and the knowledge that demands.

Crypto Asset trading

Crypto assets are digital assets that behave largely like physical assets.

Arguably the best known of these would be the cryptocurrency Bitcoin but there are a large number of different markets that you can look at.

Crypto isn’t confined to currencies either with a variety of different types of investment;

  • Cryptocurrencies – brands such as Bitcoin, Ethereum, Ripple or Litecoin 
  • Stablecoin – like Gemini Dollar or Paxos Standard tied to specific physical currency
  • Utility tokens – used to pay for services or time on platforms
  • Security tokens – digital bonds, equities, and other securities that trade peer to peer without financial intermediaries
  • Natural asset tokens – representing tangible goods like gold, oil, or carbon
  • Cryptocollectibles – unique digital assets like CryptoKitties, an app that enables users to purchase, raise, and even breed unique virtual pets

Again, you can make a lot of money in crypto but as with all things investing, the higher the return the bigger the risk!

Gold, Silver and Other Commodities

The easiest way to get into trading in precious metals is simply to buy some, but that doesn’t mean to say that it is the most profitable.

Instead, it is possible to invest in the metals market without ever taking possession of the physical asset and in this way, it is very similar to forex or crypto trading.

Speculators buy a set amount of metal at a set price in the hope that the underlying asset will become more sought after and in times of uncertainty this is where the smart money often goes.

Because there is a physical asset it is difficult to see a way that the investor would lose all of their money but it is true to say that the more aggressive your trading approach, the more risk you run.

Alternatively, it is possible to buy metals and simply hold them in the knowledge that over the long-term prices generally rise significantly.

Commodity trading is something that has been shrouded in mystery in the past and has largely been the domain of institutional traders but it doesn’t have to be that way.

It’s a lucrative sector and the market increased between 2019 and 2020 by some 24.12% so it’s clear that there are opportunities.

Again, this is a market that is very much for the sophisticated investor as disaster await the unwary but if you are prepared to do your research and build an investment strategy then a significant profit could await.

Investment doesn’t just have to be stocks

We hope we’ve given you some food for thought.

The investment opportunities highlighted in this article feature a variety of different risk profiles and some require more sophistication than others.

As always it pays to do your research so we’d never suggest you put your cash into anything that you don’t fully understand and for some of these sectors it is important not to risk more than you can afford to lose.

Health warning aside, it’s true that investors have made good money in all these areas and so for those prepared to go the extra mile and do their research, carefully developing a strategy along the way, there are some excellent opportunities waiting to be seized.

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