I often write on Quora.com, where I am the most viewed writer on financial matters, with over 830 million views in recent years.
In the answers below I focused on the following topics and issues:
- Other than the stock market, what are the best alternative investments that produce income?
- How do I start a small business in another country?
- How lucrative is stamp collecting?
- Are commodities the best investments in times of recession?
- Has Brexit finally punctured one of the most longstanding bubbles in economic history, the London property market?
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Other than the stock market, what are the best alternative investments that produce income?
Below are some examples
- Alternative ways to access real estate
Examples include:
- REITs even though these are relatively mainstream
- Loan notes where they are asset-backed and linked to property as the underlying asset
- Crowdfunded real estate.
2. Private corporate bonds/debt
- Coca-Cola’s bonds aren’t considered overly risky. What is more, people can buy them online on an investment platform
- In comparison, a private corporate placement is riskier, but can pay up 10% per year
- Even peer-to-peer lending is a form of alternative debt
3. Physical assets
- Traditionally you would need to buy, store and insure assets such as wine, silver, art, whisky and so on
- These days there are many online alternatives to that where you share the costs of a private asset.
4. Private equity
- Traditionally private equity is for high-net-worth individuals
- Increasingly, people can invest small amounts into smart ups on online platforms as well.
5. Hedge funds
- People investing in hedge funds don’t want to beat the market in most cases, they are merely looking for an uncorrelated return. In other words, something that has the potential to go up when stocks go down.
There are many others as well.
Hedge funds, private equity and physical assets aren’t usually utilized for income.
Private debt is a good alternative form of income.
Like anything, consider carefully how much risk you want to take and much more liquidity you need.
If something isn’t easy to sell, that comes with its own negatives.
How do I start a small business in another country?
It depends on the industry and country.
In some countries, like the UK and US, you can set up a business online and get banking as well.
Let’s say you want to start an Delaware LLC, and aim to sell all around the world online.
You can simple Google incorporation companies, and make sure you produce all the documents for that.
Lawyers and accountants are also easy to find.
You don’t need to physically move to the US.
The same is true in the UK and many offshore centers.
In comparison, if you want to sell a physical good to the local market, you might need to go to that country, live there for a while in some cases and set up the operation.
In some countries, it is impossible to set up businesses unless the owner lives locally.
How lucrative is stamp collecting?
Interestingly, I heard from a friend 1–2 days ago who posted on social media.
He just used a stamp he bought 15/20 years ago.
The price has more than doubled in that time.
Yet demand for stamps isn’t going up in most countries, as we send fewer letters.
What is more, that 200% increase in the price of stamps is only 5% or so per year compounded , so it isn’t that lucrative.
It isn’t just stamps either.
Collectables in general aren’t as profitable as many other investments.
They don’t pay a yield or dividend, and don’t appreciate as much as innovative company stocks.
Nevertheless, his story shows a wider point.
Whenever we buy the latest gadgets such as a phone or flash bag, we are just paying people who hold shares in the company with interest.
What is better in the last decade? Holding Apple shares or buying Apple products?
Buying future inflation by collecting stamps or only focus on consumerism?
The answer is obvious.
That doesn’t mean we shouldn’t ever be consumers, or should collect stamps, but more that we should ‘know the game’.
Better to buy unnecessary luxury items with passive income generated from assets, than just buying them from a paycheque (earned income).
Are commodities the best investments in times of recession?
Most industrial commodities are linked to supply and demand.
Do we, collectively, fly more during a recession?
Do we use hotels more?
How about going to bars or cafes?
Of course, we do things like that less in a recession as a collective, even if some individuals might increase consumption.
Therefore, oil and other industrial commodities tend to fall dramatically during a recession.
We saw that in 2008–2009. The commodity super cycle ended.
What is interesting is gold and metals also fell:
Gold’s 8–9 year bull run was ended in 2008–2009.
Both industrial commodities and gold only increased again in 2010 and 2011, once the global recession ended.
We saw something similar in 2020. During the worst of the lockdowns, commodities fell hard.
Oil futures even went negative at one point.
Has Brexit finally punctured one of the most longstanding bubbles in economic history, the London property market?
Only time will tell, but it is debatable that:
A) London house prices are a bubble
B). Brexit will affect prices that much.
It is true that London house prices have risen a lot.
Many parts of the UK haven’t recovered, adjusted for inflation, from 2008.
As this graph shows, adjusted for constant prices, it is only London that has continued to see rising real-terms prices.
It is true that London benefitted from being a hub to the European market, much as Singapore is for ASEAN.
However, London is like an equivalent of a New York in Europe.
It still has a draw for wealthy people, and that demand pushed up prices.
That draw still exists for some despite Brexit and the small exodus we have seen recently, driven by Russians and some others leaving.
It is too early to say whether house prices will fall consistently though, just because they are likely to in 2023.
If prices do consistently fall adjusted for inflation, it is more likely due to a combination of reasons.
Those reasons could be a combination of Brexit, higher taxes on the wealthy and the small but steady increase in wealthy people leaving the city.
Brexit certainly won’t help increase prices though!
Pained by financial indecision?
Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
