Past investment strategies are beginning to look even less relevant in today’s financial climate and whereas you could previously add some blue chip oil companies to your portfolio and enjoy a healthy dividend and some growth on the share price thrown in for good measure, those halcyon days seem to be well and truly over.
Recent announcements of losses that were once unthinkable, mean that investors should expect dividend cuts and to take one example to demonstrate how the landscape has changed, you only have to look at the scenario relating to Chevron.
They recently reported a quarterly loss for the first time since 2002 and they are indicative of the rest of the industry, because they are currently funding dividends through additional borrowing.
This can’t and won’t last forever, which means that we should prepare for some pain when it comes to the once seemingly unstoppable dividend gravy train, not just in the oil industry but other traditional investment sectors too.
So if you are not going to be able to generate a reasonable income from the usual suspects who have served you so well in the past, it is probably time to consider some alternative investments that could keep your money working hard and producing an acceptable return.
We are now living in a digital world and many of the transactions and activities we carry out on a daily basis, are done through the internet.
The internet has grown-up in recent years in terms of being able to generate an income and there are now many ways to create a website that is able to generate income and profits. This means that website investing can be considered a viable alternative investment strategy, if you are able to build a portfolio of sites that you have control of and manage to find some well-run websites which do a pretty good impression of a generous ATM machine.
You are probably unlikely to be able to acquire a website which has the earning capacity of the likes of Google or ebay etc, which can generate earnings of more than $200 per second, but there are still plenty of decent opportunities.
There are several types of web sites that can help you generate a profit.
Blogs can be hugely popular and with a regular stream of new articles, they can generate a lot of interest and prove a good vehicle for advertising and income opportunities.Content-based websites with a well-established level of traffic are also worth considering, as are product & service sites which have been specifically designed to buy or sell a product or service.
if you follow the link to our website investing guide you can get some more information and links to research the ins and outs of website investing for income generation.
Investors looking to generate income from property, often look at the landlord route and add a portfolio of rental properties to try and generate an income from monthly rental payments.
An alternative investment worth looking at if you are wanting to generate an income is ground rents.
The demand for properties capable of producing a decent yield has helped to force up valuations and subsequently compressed yields, which is why the lesser-known route of ground rent investments could offer some value.
Ground rents should not be confused with service charge payments, which are based on the maintenance of the property. Ground rents are payments that are due to the freeholder of a property which has been sold on a leasehold basis and the default rate is understandably low on these payments, because the leaseholder risks losing their property.
This is an added attraction and a potential win/win scenario, as you can generate a regular income but if the leaseholder fails to pay, you could assume control of the property and even profit from finding a new leaseholder.
As default rates are historically low, it is better to concentrate on the income-generating opportunity that ground rents offer as an alternative investment strategy.
We have some further information on our site about ground rent investing, and you should be able to find a number of opportunities to look at when you carry out your own research.
Although most of us have been told at some point in our lives that money doesn’t grow on trees, you could argue that it can be grown from trees.
Forestry investments are a viable alternative investment when it comes to generating an income over the longer term.
There are a number of funds that offer you the chance to pool your resources and invest in a forestry scheme, where the returns are unlikely to be spectacular but steady. Based on past performance, it is likely that you should be able to generate a return of about 4% to 5% annually, with the Investment Property Database calculating that their forestry index, covering a number of different portfolios, has delivered an annualized return of over 7% since 1992.
Investing in forests is not without risks of course, but provided you have realistic expectations and are not anticipating stellar returns, it has the potential to deliver a respectable income-generating performance.
Car parks for income
People will always need to park their car, and demand for parking spaces often creates the car-park full sign, which would be frustrating as a motorist but a welcome sign if you were the investor in that particular car park.
The phrase guaranteed-investment return is one to treat with caution when you see it used, but there is a fair case to argue that car park investments could come close to achieving that seemingly unattainable goal.
Investors need to tread carefully whenever they are looking to put their money into a new scheme and the advice with car park investing is to check out the opportunity thoroughly and invest only in areas where there is a proven high demand for parking spaces.
There is an article on investing in car parks on our site which you may want to read in addition to doing your own research on this income-generating alternative investment.
Infrastructure investments can tick a lot of boxes for alternative investors, as they provide you with exposure to real assets, offer you genuine diversification and the icing on the cake, is there is an income yield available too.
Infrastructure and property funds as an alternative investment strategy can work well for individual investors, as they open up the chance to pool your cash with other investors and invest in a range of projects, all of which have varying maturity dates.
What this does, is create an opportunity to tap into infrastructure projects which are often regulated by governments and tend to be long term in nature, which means that you could benefit from regular income payments which are likely to be reliable and consistent, for a reasonable length of time.
Although this is not in any way a recommendation, if you take a look at the First State Global Listed Infrastructure Fund, you get a valuable insight into how these funds are structured and how they perform.
Many of its underlying investments are in major projects like road building and the fundamental point with infrastructure projects, is that many of them get completed regardless of the financial climate, whereas some other private projects can sometimes get shelved.
Peer-to-peer lending has revolutionized lending markets and allowed loans to be offered without having to go to a bank for funding.
P2P lending allows you to put any money you have in low-yield savings accounts to work, by agreeing to lend to borrowers who have been vetted by the lending platform you are using.
There are numerous portals to become an investor through and you have the ability to control and screen each loan you make, choosing your level of risk and the rate of return that you are comfortable with.
There is always the risk to your capital when you become a lender, but you can achieve much higher returns than would be possible in a low-interest rate environment like a savings account, with returns hopefully negating any losses that you might incur along the way.
It is achievable to earn somewhere between 5% and 9% through the various P2P lending sites and although there are clearly risks attached, earning an income from this alternative investment strategy, should definitely be achievable.