Beyond Stocks: The Best Ways To Invest Money for Real Portfolio Diversification

Most investors assume building wealth means buying stocks or index funds. But if you want to discover the best ways to invest money beyond traditional equities, you’ll find plenty of options worth exploring. Smart investors know that spreading capital across non-correlated assets — or even negatively correlated ones — strengthens long-term returns and reduces overall portfolio volatility.

Whether you’re intimidated by Wall Street, seeking genuine diversification, or simply looking for alternative income streams, these 13 investment vehicles can help you put your money to work. Each option carries different risk levels, liquidity profiles, and income potential. Do your own due diligence before committing any capital.

Lower-Risk Fixed Income Options: Best Ways To Invest Money Safely

Savings Bonds and Government Securities

If stable, predictable returns appeal to you, U.S. savings bonds offer one of the safest investment paths available. Series EE bonds lock in a fixed interest rate, while Series I bonds adjust based on inflation rates. Since they’re backed by the federal government, your principal is essentially guaranteed unless the government itself defaults — an unlikely scenario.

The trade-off is modest returns compared to stock market gains, but the certainty makes bonds ideal for risk-averse investors seeking reliable income streams.

Certificates of Deposit (CDs)

Banks offer CDs as fixed-term deposit accounts with guaranteed interest rates, protected up to $250,000 by the FDIC. You commit your money for a set period — anywhere from months to years — and receive predetermined returns.

Early withdrawal triggers penalties, making CDs best for capital you won’t need immediately. While returns typically lag long-term stock performance, your investment never loses value, making this among the best ways to invest money if capital preservation is your priority.

Corporate Bonds

When companies need to raise capital, they issue bonds that investors can purchase. Bondholders receive fixed interest payments over a specified period, then get their principal back at maturity.

The interest rate varies based on default risk — higher risk companies offer higher yields. Unlike stocks, bonds don’t grant ownership stakes, so you won’t benefit from company growth. However, your income remains consistent regardless of business performance, providing more predictable returns than equities.

Real Asset Investments: Building Wealth Through Property

Real Estate Investment Trusts (REITs)

REITs democratize real estate investing by pooling capital into professionally managed portfolios spanning residential properties, commercial buildings, hotels, warehouses, and other assets. These trusts distribute rental income to shareholders, offering real estate exposure without the millions in capital or hours of research required for direct property purchases.

This approach provides portfolio diversification while generating regular income streams from actual property operations.

Vacation Rental Properties

Buying vacation homes as rental properties combines personal enjoyment with investment potential. You use the property for vacations while renting it out during off-seasons to generate income that covers carrying costs and potentially funds appreciation gains.

Rental platforms simplify management, but these properties lack liquidity — selling them takes time if you need quick access to capital.

Income-Generating Alternatives: Best Ways To Invest Money Beyond Equities

Peer-to-Peer Lending

P2P lending platforms let you earn interest by funding personal loans through services like Prosper and Lending Club. You can start with investments as small as $25, diversifying across multiple borrowers to reduce default risk.

If you hold just one note and the borrower defaults, you lose everything. But spreading capital across 100+ smaller loans means several defaults won’t eliminate your profits. This approach transforms you into a non-traditional lender earning interest income.

Municipal Bonds

State and local governments issue bonds to fund infrastructure projects like schools and highways. Municipal bonds typically offer lower interest rates than corporate bonds, but here’s the advantage: interest income is exempt from federal taxes and often state/local taxes too.

The after-tax return frequently matches or exceeds higher-yielding corporate bonds, making munis among the best ways to invest money for high-income earners seeking tax efficiency.

Inflation Hedges and Commodity Plays

Gold and Precious Metals

Gold offers portfolio diversification through multiple vehicles: physical bullion, coins, mining company stocks, futures contracts, or gold-focused mutual funds. Precious metals historically hedge against inflation and currency devaluation.

Direct bullion or coin purchases require secure storage — bank safe deposit boxes work well. The FTC warns that gold prices fluctuate significantly, so investigate any storage companies thoroughly to ensure reputation and security standards before purchasing.

Commodities Futures

Trading futures contracts on agricultural products (corn, grain) or metals (copper) lets you profit from supply-demand shifts. When commodity prices rise, contract values increase; when they fall, losses mount quickly.

Commodities can hedge inflation but demand expertise, competitive ruthlessness, and substantial risk tolerance. Enter this market only if you understand the mechanics and can afford significant losses.

Alternative Investments: High-Risk, High-Reward Best Ways To Invest Money

Cryptocurrencies

Bitcoin and alternative cryptocurrencies represent decentralized digital assets gaining worldwide adoption. Crypto volatility dwarfs stock market swings — dramatic price movements in single days aren’t unusual.

This investment class suits only risk-tolerant investors with conviction about cryptocurrency futures. If price swings keep you awake at night, this isn’t the right approach.

Private Equity Funds

Private equity managers pool investor capital to acquire stakes in privately held companies, implementing operational improvements to drive growth and eventual exits. Funds often generate impressive returns but charge substantial management fees and lock up capital for years.

Entry typically requires accredited investor status (high net worth or income thresholds), limiting availability for average investors. This remains among the best ways to invest money if you qualify and can tolerate illiquidity.

Venture Capital Investing

Venture capital involves funding early-stage startups with high growth potential. It parallels private equity but focuses on companies just starting operations rather than established private firms.

Risk is extreme — most startups fail. However, the occasional massive success can produce extraordinary returns. Crowdfunding platforms now offer limited venture opportunities outside traditional accredited investor restrictions.

Annuities

Insurance companies sell annuities as contracts guaranteeing future payment streams. You pay an upfront sum and receive regular payments over specified periods or your lifetime. Fixed annuities offer predictable payments; variable and indexed versions tie returns to market performance.

Annuities defer taxes on earnings until distributions begin, but fees and broker commissions often reduce net returns significantly. Research thoroughly before purchasing — some salespeople prioritize commissions over your interests.

Final Thoughts: Constructing Your Diversified Portfolio

These 13 investment options represent just some of the best ways to invest money outside traditional stocks. The right approach depends on your risk tolerance, time horizon, liquidity needs, and financial goals.

Conservative investors might combine savings bonds, CDs, and REITs. Aggressive investors might layer in cryptocurrencies, commodities futures, and venture capital. Most investors benefit from balanced portfolios mixing multiple categories.

Whatever you choose, conduct thorough research, understand each investment’s mechanics, and consider consulting qualified financial advisors before deploying capital. The best ways to invest money are ultimately those aligned with your personal circumstances and investment philosophy.