It’s a bit of a tricky morning in the bond market when it comes to reconciling the data with the market movement. At face value the headlines make a better case for lower rates with GDP at 1.6 vs 2.5, wholesale inventories missing big and Jobless Claims not too far from forecast. But the devil is in the details–specifically, the details inside the quarterly GDP data. GDP will be reported 3 times for Q1. Today was the first of those and as such, the PCE price data component offers a bit of a sneak peek at tomorrow’s PCE inflation data.
GDP is not a hugely important report, but PCE inflation is. With all that in mind, the PCE component in today’s data was 3.7 vs 3.4. In a world where a 0.1 beat/miss can cause massive volatility for the bond market, that’s a huge beat. Bonds will likely be feeling extra defensive until and unless tomorrow’s Core PCE number tells a slightly less dramatic story.
Stocks haven’t loved the data either, due to the implications for the Fed’s rate outlook. The following isn’t the pattern normally associated with stocks and bonds, but it is prevalent at times when the market is actively refining its outlook for the Fed Funds Rate.
In the slightly bigger picture, this morning’s weakness constitutes the first significant break above the 4.65 level and it breathes a bit more life into the uptrend that had dominated the month of April (the one that looked to be defeated by the 4.65 ceiling.
Hey, I’ve just been featured on CNBC and I want to say hello to all of my new readers. You can read the CNBC article here – I made $40,000 a month from 3 income streams during a 4-month cruise around the world—here’s how If you are a new visitor – welcome to Making Sense…
Hey,
I’ve just been featured on CNBC and I want to say hello to all of my new readers.
You can read the CNBC article here – I made $40,000 a month from 3 income streams during a 4-month cruise around the world—here’s how
If you are a new visitor – welcome to Making Sense of Cents!
I have received many emails about how I was able to afford this trip. I have a free How To Start A Blog course that you can sign up for here. I also talk about this below and how I’ve been able to earn over $5,000,000 blogging over the years.
If you want to read more about my world cruise trip, I recommend reading Around-The-World Cruise With A Kid (25+ Countries In 4 Months!).
Here are some blog posts that you may find helpful and enjoy:
If you have any questions, please leave a comment below or send me an email.
Thanks for stopping by.
-Michelle Schroeder-Gardner
—-
In addition to reading the CNBC article linked above, I also want to talk about how I grew a blog that has earned me over $5,000,000. I know I will get a lot of questions, so I figured it’s best to lay it all out right here 🙂
What started as just a hobby turned into one of the most life-changing things I’ve ever done – that’s starting my blog, and learning how to make money with it.
Since learning how to monetize a blog over 10 years ago, I have now earned over $5,000,000 from my site. This is still hard for me to believe, and I’m the one who’s lived it!
In the beginning, all I was doing was tracking my own personal finance progress as I finished school and started paying off my student loans. Blogging was a very new concept to me at the time – I heard about it from a magazine – and people were just learning how to monetize blogs back in 2011.
Most bloggers started back then with display ads and sponsored posts, but the options have only increased.
Because of all of the new ways to make money blogging, like affiliate income and selling your own products, you can make somewhat passive income as a blogger.
Passive income is my favorite way to make money because it makes blogging even more flexible and something I can do as I work from home, travel, and work whenever I want.
Blogging has changed my life for the better, and I’m now earning thousands of dollars a month doing something I love.
Learning how to monetize a blog takes work and time, but it’s 100% possible to do. I started earning money after just six months of blogging, and I didn’t even set out to make money when I created Making Sense of Cents. Just think of the potential if you start out knowing that making money blogging is possible!
Starting my blog is one of the best things I’ve ever done for my work, personal, and financial life. And, I urge anyone who is interested to start a blog and learn how to monetize it.
How I earned my first income from blogging
Many of my readers have heard this story, but I love sharing it because I started out like many of you, except I had no idea that blogs could make money. When I started Making Sense in August of 2011, I simply wanted a way to keep track of my financial progress and meet others who had similar goals.
As I started getting to know other bloggers in the community, a blogger friend of mine connected me with an advertiser who was willing to pay me $100 for an advertisement.
I couldn’t believe someone would pay me $100 to advertise on my site!
While it wasn’t a lot of money, especially considering the amount of time and work I put towards my blog in those 6 months, it was very motivating to see that something I loved doing could actually make money.
After that first $100, I started doing a lot of research on how to monetize a blog, and my blogging income quickly grew from there.
One year after I started my blog, I was earning around $1,000 a month, and I was making around $10,000 monthly two years after I started Making Sense of Cents.
My income only continued to grow, and I am still earning a healthy income from this website today.
How To Start A Blog FREE Course
If you want to learn how to monetize a blog and you haven’t started your blog, then I recommend starting with my free blogging course How To Start A Blog FREE Course.
Here’s a quick outline of what you will learn in this free course:
Day 1: Reasons you should start a blog
Day 2: How to determine what to blog about
Day 3: How to create your blog – in this lesson, you will learn how to start a blog on WordPress, and my tutorial makes it very easy to start a blog
Day 4: How to monetize a blog – this is where you learn about the many different ways to make money blogging!
Day 5: My tips for earning passive income from your blog
Day 6: How to grow your traffic and followers
Day 7: Miscellaneous blogging tips that will help you be successful
This is delivered directly to your email inbox, and you will learn how to grow a blog from scratch.
Start with a plan for your blog
Sure, you can start on a whim, and that’s kind of what I did, haha.
But, I do think that creating a plan is a good idea if you want to learn how to monetize a blog. This can help you get an organized start, identify your blog’s niche, decide on your blogging goals, find opportunities for blogging income, and more.
It wasn’t until 2015 that I finally created a blogging plan (that’s 4 years after I started!), and my blog income grew significantly after that.
I credit that growth to creating a plan!
Having a plan would have been a huge help in the beginning, and I wish I would have started with one. I probably missed some income opportunities because I had no real plan or direction in the first couple of years.
Since creating a blogging plan, I became more focused on goals and motivated toward improving and building Making Sense of Cents.
Here are some questions that you may want to ask yourself when creating a plan for your blog:
What will you write about on your blog?
How do you want to make money with your blog?
What will you do to reach readers on your blog?
What are your goals for your blog?
Thinking about, researching, and answering these questions will help guide you on your journey and help you decide what to do next.
Write high-quality and engaging blog posts
Your blog’s content is extremely important. This will be what attracts your readers, has them coming back for more, earns you blogging income, and more.
Now, you don’t need to be an expert or need a degree to start talking about a subject, but you do need to be knowledgeable or interested in what you are talking about. And, always be truthful! This will show in your writing and actually help your readers.
To write high-quality content on your blog, here are some tips:
Figure out exactly what it is that you’d like to write about and why you think the content is important. Being passionate about a subject will give you the motivation to write content that people want to read. Just think about it: If you don’t enjoy writing your content, then why should you expect someone else to want to read it?
Ask your audience what they want you to write about. Many of my best ideas come from expanding on reader questions.
Research your blog topics by reading news articles, going to a library, searching for statistics and interesting facts, and more.
If your blog posts are more personal in nature, then dig deep and share your thoughts, and be personable in your writing – your readers want to hear your story!
Write long, helpful content. Sure, some great content may only be a few hundred words, but to be as helpful as possible, long content is usually the best. My content is usually over 2,000 words, and this article is around 5,000. Now, you don’t want to just write a lot of fluff content in order to get more words in – you want to actually be helpful!
Reread your content. I used to read my content 10 times or more before I would publish it. Now, I have an editor who makes sure I’m always publishing high-quality content.
Network, network, network
If you want to learn how to monetize a blog, then networking can be extremely helpful.
Networking can mean:
Making friends with other bloggers
Attending blogging conferences
Sharing content that other bloggers have written
Following other bloggers in your niche on social media
Signing up for other bloggers’ newsletters
Joining blogging groups on Facebook
Some bloggers don’t do any of these things and purely see other bloggers as competition. I don’t believe this is the correct way to approach blogging because you will hold yourself back immensely!
Networking is important because it can help you enjoy blogging (friends are nice to have, right?!), teach you new ideas (such as how to make money blogging or how to grow a blog), make valuable connections, and more.
Keep in mind that networking is even how I earned my very first $100 blogging. My blogging friend connected me with an advertiser, which helped changed my blogging journey.
I have learned a lot about blogging from the blogging community, and the people I’ve connected with have been a tremendous support as I’ve grown my blog.
Be prepared to put in a lot of hard work
Starting a blog is relatively easy. But, growing and learning how to monetize a blog takes a lot of work.
You’ll have to:
Start a blog, design it, create social media accounts, and more
Write high-quality blog posts
Attract an audience of readers
Monetize your blog
Continue learning about blogging
And more
Even when I was just a new blogger and had no plans of making money blogging, I was still spending well over 10 hours a week on Making Sense of Cents.
When I was working my full-time day job and earning an income from my blog, I was working around 40-50 hours a week on my blog on top of my day job!
Now that I blog full-time, my hours vary. Some months I hardly work, and there are other months that I may work 100 hours a week.
It’s not easy, and there’s always something that needs to be done.
But, I absolutely love blogging, which makes the hard work a little less tough.
How to monetize a blog: 4 different ways
There are many different ways you can monetize your blog, including:
Affiliate marketing
Advertisements and sponsorships
Display advertising
Create your own product, such as an ebook, course, physical or online products, and more
You could choose to monetize your blog using all of these methods, or even just one. It’s just a personal decision.
For me, I like to be diversified and monetize in many ways, so I do them all.
Below, I am going to dive a little deeper into each way to make money blogging.
1. Affiliate marketing
Affiliate marketing can be a great way to make money blogging because if there is a product or company that you enjoy, all you have to do is review the product and share a unique affiliate link where your readers can sign up or make a purchase.
In fact, this is my favorite way to monetize a blog. I enjoy it because it can be quite passive – I can create just one blog post and potentially earn an income from it years later. This is because even though a blog post may be older, I am still constantly driving traffic to it and readers are still purchasing through my affiliate links.
Affiliate marketing is a blog monetization method where you share a link to a product or company with your readers in an attempt to make an income from followers purchasing the product through your link.
Here are some quick tips so that you can make affiliate income on your blog:
Use the Pretty Link plugin tocleanupmessy-lookingaffiliatelinks. I use this for nearly all of my affiliate links because something like “makingsenseofcents.com/bluehost” looks much better than the long, crazy-looking links that affiliate programs usually give you.
Provide real reviews. You should always be honest with your reviews. If there is something you don’t like about a product, either don’t review the product at all or mention the negatives in your review.
Ask for a commission increase. If you are doing well with a particular affiliate program, ask to increase your commissions.
Build a relationship with your affiliate manager. Your affiliate manager can supply your readers with valuable coupons, commission increases, bonuses, and more.
Write tutorials. Readers want to know how they can use a product. Showing them how to use it, how it can benefit them, and more are all very helpful.
Don’t go overboard. There is no need to include an affiliate link 1,000 times in a blog post. Include them at the beginning, middle, and end, and readers will notice it. Perhaps bold it or find another way for it to stand out as well.
You can learn more about affiliate marketing strategies in my course Making Sense of Affiliate Marketing.
2. Advertisements and sponsorships
Advertising on a blog is one of the first ways that bloggers learn how to monetize a blog. In fact, it’s exactly how I started!
This form of blogging income is when you directly partner with a company and advertise for them on your website or social media accounts.
You may be writing a review for them, a tutorial, talking about their product or company, taking pictures, and so on.
If you want to learn how to increase your advertising-income, I recommend taking my Making Sense of Sponsored Posts course.
3. Display advertising
Display advertising is one of the easiest ways to make money blogging, but it most likely won’t earn you the most, especially in the beginning.
I’m sure you’ve seen display ads before. They may be on the sidebar, at the top of a post, within a blog post, and so on.
The ads are automatically added when you join an advertising network, and you do not need to manually add these ads to your blog.
Your display advertising income increases or decreases almost entirely based on your page views, and once you place the advertisement, there’s no direct work to be done.
If you want to learn how to monetize a blog through display advertising, then some popular networks include Adsense, MediaVine, and AdThrive.
Personally, I use AdThrive for my display advertising network. I don’t have many display advertisements on my blog, but it is easy income.
4. Sell your own products
Another popular way to monetize a blog is to create a sell your own products.
This could be an online product, something that you ship, and so on, such as:
An online course
A coaching program
An eBook
Printables
Memberships
Clothing, candles, artwork, hard copy books, and anything else you can think of
And the list goes on and on. I have seen bloggers be very successful in selling all kinds of things on their blogs.
What’s great about selling your own product is that you are in complete control of what you are selling, and your income is virtually unlimited in many cases.
I launched my first product about 5 years after I created Making Sense of Cents, which was a blogging course called Making Sense of Affiliate Marketing. I regret not creating something sooner because this has been an excellent source of income and has helped many people along the way.
Have an email list
If you really want to learn how to monetize a blog, I recommend that you start an email list from the very beginning.
I waited several years to start my email list, and that was a huge mistake!
Here’s why you need an email list right away:
Your newsletter is YOURS. Unlike social media sites, your newsletter and email subscribers are all yours, and you have their undivided attention. You don’t have to worry about algorithms not displaying your content to readers, and this is because they are your email subscribers. You aren’t fighting with anyone else to have them see your content.
The money is in your email list. I believe that email newsletters are the best way to promote an affiliate product. Your email subscribers signed up to hear what YOU have to write about, so you clearly have their full attention. Your email list, over any other promotional strategy, will almost always lead to more income and sales.
Your email subscribers are loyal to you. If someone is allowing you to show up in their inbox whenever you want, then they probably trust what you have to say and enjoy listening to you. This is a great way to grow an audience and a loyal one at that.
Email is a great way to deliver other forms of content. With Convertkit, I am able to easily create free email courses that are automatically sent to my subscribers. Once a reader signs up, Convertkit sends out all the information they need in whatever time frame I choose to deliver the content.
Attract readers
As a new blogger, you’ll want to find ways to attract a readership to your blog and your article.
No, you don’t need millions and millions of page views to earn a good living from blogging. In fact, I know some bloggers who receive 1,000,000 page views yet make less money than those with 100,000 monthly page views.
Every website is different, but once you learn what your audience wants, you can start to really make money blogging, regardless of how many page views you receive.
Having a successful blog is all about having a loyal audience and helping them with your content.
Even with all of that being said, if you want to learn how to monetize a blog, learning how to improve your traffic is valuable. The more loyal and engaged followers you have, the more money you may be able to make through your blog.
There are many ways to grow your readership, such as:
Write high-quality articles. Your blog posts should always be high-quality and helpful, and it means readers will want to come back for more.
Find social media sites to be active on. There are many social media platforms you can be active on, such as Pinterest, Facebook, Twitter, Instagram, TikTok, Youtube, and others.
Regularly share new posts. For most blogs, you should publish content at least once a week. Readers may forget about you if you go for weeks or months at a time without a blog post.
Guest post. Guest posting is a great way to reach a new audience, as it can bring new readers to your blog who will potentially subscribe to it.
Make sure it’s easy to share your content. I love sharing posts on social media. However, it gets frustrating when some blogs make it more difficult than it needs to be. You should always make sure it’s easy for readers to share your content, which means your social media icons should be easy to find, all of the info input and ready for sharing (title, link, and your username tagged), and so on. Also, you should make sure that when someone clicks on one of your sharing icons the title isn’t in CAPS (I’ve seen this too many times!).
Write better titles. The title of your post can either bring readers to you or deter them from clicking over. A great free tool to write better headlines is CoSchedule’s Headline tool.
Apply SEO strategies. SEO (search engine optimization) is not something I can teach in this small section, but I go over it below in another section.
Have a clean and user-friendly blog design. If you want more page views, you should make it as easy as possible for readers to navigate your blog. It should be easy for readers to find your blog homepage, search bar, blog posts, and so on.
Now, I also want to talk about helpful resources, courses, and more that can help you to learn how to grow your page views on your blog.
Below are some of my favorite blogging resources to help you improve your traffic:
Grow through SEO
SEO (search engine optimization) is how you get organic search traffic to your blog.
When you search a phrase on Google, you’ll see a bunch of different websites as the results. This is the result of these websites applying SEO strategies to their blog.
This is a great way for readers to find your blog, and SEO is important to pay attention to as you learn how to monetize a blog!
Below are some of my favorite SEO resources:
Stupid Simple SEO: This is my favorite overall SEO course, and one of the most popular for bloggers. I highly recommend taking it. I have gone through the whole course, and I constantly refer back to it.
Easy On-Page SEO: This is an easy-to-follow approach to learning on-page SEO so your articles can rank on Google. I have read this ebook twice, and it is super helpful.
Easy Backlinks for SEO: This ebook will show you 31 different ways to build backlinks, which are needed for SEO.
How To Get 50,000 Pageviews per Month With Keyword Research: This ebook shares the steps for keyword research so that you can get SEO traffic to your website.
Common questions about how to monetize a blog
Below, I’m going to answer some questions I’ve received about how to start a blog such as:
How many views do you need to monetize a blog?
How do beginner bloggers make money?
Why do bloggers fail?
How many posts should I have before I launch my blog?
How many times a week should I post on my blog?
How many views do you need to monetize a blog?
The amount of page views needed to make money blogging varies, and there is no magic number that you should be aiming for.
This is because it depends on so many factors, such as how you will monetize your blog, your niche, the number of email subscribers you have, the quality of your website, and more.
You may see success with 10,000 page views a month, or you may see success with over 100,000 page views a month. It simply depends on the factors above.
How do beginner bloggers make money?
Beginner bloggers can make money in many different ways, such as display advertising, affiliate marketing, creating their own products, and sponsorships.
You can start any of these right from the very beginning.
Display advertising is usually the easiest way to begin monetizing a blog, but the payoff is not very high, especially in the beginning when your page views are not high.
How many posts should I have before I launch my blog?
I recommend just launching your blog as soon as you have one blog post and a design. Building a huge backlog of blog posts isn’t usually needed, and it can prevent you from ever getting started!
How many times a week should I post on my blog?
The more blog posts you have, then the more traffic you may get. That’s because it’s more opportunities to show up in Google searches or share your posts on social media.
I recommend publishing a new blog post at least once a week. Anything less isn’t advised.
Publishing blog posts consistently is smart because readers know to expect regular content from you.
Why do bloggers fail?
Bloggers fail for many different reasons. These reasons may include:
Giving up too soon. It takes time to make money blogging, and sadly, many people give up just a few months into starting a blog.
Not publishing consistently. I recommend publishing content at least once a week, as described in the previous section. Some new bloggers may go months without publishing, and this will take them much longer to make money blogging as they are simply not dedicating enough time to their blog.
Not spending enough time learning about blogging. Blogging is not as easy as you may think. There is a lot to learn in order to make it work. You may need to learn about how to grow your blog’s traffic, how to monetize a blog, how to write high-quality content, and more.
Not having your own domain and self-hosting. If you want to make money blogging, I highly recommend owning your domain name and being self-hosted. The longer you put this easy step off, the longer it will most likely take for you to make money blogging. You can learn more at How To Start a WordPress Blog.
And much more. Blogging is like any business – there are things to learn, things to improve on, and more.
How do I start a blog?
If you have any other questions related to starting a blog, I recommend checking out What Is A Blog, How Do Blogs Make Money, & More. In this article, I answer more questions related to blogging such as:
How do I come up with a blog name?
What blogs make the most money?
How do you design a blog?
How many views do you need to make money blogging?
How many blog posts should I have before launching?
Tuesday marked the highest mortgage rates since November, capping a mini surge that began after last week’s inflation data. After a moderate improvement yesterday, rates moved back up toward (but thankfully not above) the recent highs today.
Financial markets reacted to stronger economic data and comments from Federal Reserve officials regarding the possibility of no Fed rate cuts in 2024 and even a small chance of rate hikes. Importantly, Fed members don’t see hikes as being likely and the economic data would have to accelerate enough to justify a change in strategy.
We’re definitely not there yet, but we’re just as certainly not there when it comes to lower inflation readings required to validate the first rate cut. At the March Fed meeting, officials still saw 3 cuts by the end of the year, albeit just barely. Based on data that’s come out since then, markets are betting on only one cut.
Other news sources are running headlines regarding a big jump in mortgage rates to 7.10% based on Freddie Mac’s weekly survey results released today. Keep in mind that’s a weekly number based on average of last Thursday through yesterday and that it doesn’t account for the impact of discount points. In other words, rates are definitely not 7.1 today, and especially not without points.
The Fed expected to be able to cut rates 3 times in 2024 as recently as March. Financial markets agreed. But the data that’s come out since then has everyone singing a different tune. This week’s data was more of an afterthought compared to last week’s.
The chart above pertains to Fed rate expectations, and that’s not exactly the same as longer term rates like mortgages and 10yr Treasury yields. The latter saw a bit more volatility this week.
Monday’s Retail Sales data was much stronger than expected and markets reacted immediately. Tuesday’s data was consequential, but it was followed by a speech in which Fed Chair Powell had an opportunity to provide some updated thoughts on the rate outlook. After all, the Fed hadn’t seen the most recent CPI data (and several other strong reports) at the time the last round of rate projections came out in March.
As the market expected, the tone is evolving. While Powell and the Fed repeat that the rate path depends on economic data, it’s no surprise to see recent comments acknowledging a surprising amount of strength in the recent data. Stronger data means fewer rate cuts. Powell went as far as saying there was new uncertainty as to whether the Fed will even be able to cut in 2024.
Two days later, NY Fed President John Williams struck similar tone. Just last week, he had pushed back on the CPI data, saying the Fed wasn’t surprised by setbacks in the inflation data. This week’s comments did more to acknowledge the other side of data dependency. Specifically, Williams said the Fed could hike again if the data called for it.
To be sure, these are not earth-shattering “ifs” and “thens.” But the market hones in on the subtle differences with which the data dependency is communicated. It didn’t help that Thursday morning’s Philly Fed Manufacturing Index moved up to the highest levels in 2 years or that the “prices paid” component of the same report moved up much more than economists expected.
Here’s how the entire week looked in terms of 10yr Treasury yields.
Friday’s reaction to the attacks in Iran is important because it shows us that some geopolitical news is indeed worth a reaction. That was less clear earlier in the week as multiple batches of somewhat similar headlines failed to cause as much movement. The difference on Friday was the uncertainty over the status of Iran’s nuclear sites as well as concern that it would be the catalyst for the outbreak of much more significant fighting. The market calmed down quite quickly once it was clear the nuclear sites were not damaged and that Iran was not retaliating. The correlation between stock prices and bond yields further confirms the “flight to safety” trading pattern commonly seen after such news.
In the bigger picture, the past 2 weeks have gone a long way toward making the end of 2023 look like yet another “false start” toward lower rates. Up until then, we had sort of a sideways fighting chance. While we have labeled late 2023 as the 3rd false start of this cycle, it wouldn’t meet the purest definition until rates rise back above last October’s highs. We’re definitely not there yet and we won’t know if we’ll get there until we see the next round of big ticket economic data in May.
In the meantime, home sales remain constrained.
Next week’s economic data is fairly muted apart from Friday’s PCE price index. This isn’t as much of a market mover as the Consumer Price Index (CPI), but it could certainly cause some volatility if it happens to send a different message.
The overnight session began with a very clear flight to safety in stocks (sell) and bonds (buy) on headlines regarding increased hostilities between Iran and Israel. There have been plenty of “increased hostility” headlines this week that have not had much impact. These were different because the initial newswires played up the risk to Iran’s nuclear sites. Shortly thereafter, the IAEA said there was no damage to nuclear sites and Iran said there were no plans for retaliation, despite previous warnings to the opposite effect. With that, stocks and bonds began grinding back in the other direction–an effort that continues into early domestic trading.
Alternative investments, or alts, are assets like cryptocurrency, options, private equity, real estate and art. Alternative investments are typically defined as investments aside from stocks, bonds, mutual funds and other investments that traditionally make up the core of a portfolio.
While the “alternative investments” classification encompasses lots of very different types of investments, most share a few characteristics: Many alternative investments are less regulated by the U.S. Securities and Exchange Commission (SEC) than traditional investments, they tend to be more difficult to sell, and they may not have a high correlation with the stock market. That means if the overall market is down, it doesn’t make it more likely for your alternative assets to be down too.
Another commonality is that they tend to carry more risk than traditional investments. All investments should be approached with scrutiny, but alts deserve an extra degree of caution. One guideline is to invest no more than 10% of your overall investment portfolio into higher-risk investments.
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How to buy alternative investments
There are a handful of ways to invest in the alternative investments covered here, but buying alts typically boils down to one of three options: Buying the asset itself, investing in a company that invests in the asset or is involved in its production, or investing in a fund that holds lots of those companies. For example, you can buy raw gold, stock in companies related to gold, or a gold ETF.
If you want to buy alts themselves, it may be trickier than buying traditional assets. While some alts can also be purchased from a brokerage, others, like futures and forex, typically require a special account. Crypto can be found on crypto exchanges, real estate crowdfunding can be accessed through individual platforms, and collectibles are often purchased at auctions or private sales.
If you want to gain exposure to an alt through a stock or fund, you need to have a brokerage account to do so.
7 alternative investments to consider
Here are seven alternative investments that are worth exploring.
1. Derivatives
Derivatives are investments that are linked to an underlying asset, commodity or index. There are several types of derivatives, including futures and forex.
Investing in derivatives can often involve complex strategies. If you’d like to try out some advanced trading strategies, you can practice with paper trading before you risk your real money.
Futures
Futures are derivative contracts that outline an agreement to buy or sell a particular asset at a set date in the future for a particular price. Futures contracts may obligate the buyer to take physical delivery of the asset at the set date, so to avoid having a truck of corn show up on your doorstep, you may have to sell at a significant loss.
Forex
Forex trading is a speculative investment through which you buy and sell different currencies. For instance, if you believe the U.S. dollar will rise and the euro will fall, you could exchange euros for U.S. dollars. Most traditional brokerages don’t offer access to forex, so you’ll need to look into a forex broker if you want to start trading international currencies.
2. Digital assets
Digital assets, such as cryptocurrencies and nonfungible tokens (NFTs), are supported by blockchain technology.
Cryptocurrency
Cryptocurrency is a form of digital currency. There are many different crypto coins, such as Bitcoin or Ethereum. You can use crypto to pay for things, like you would with a regular currency, or you can use it as an investment by buying it in the hope that it will increase in value over time (like pretty much any other investment).
If you’re looking to purchase crypto directly, there are a few ways you can do it. Some online brokerages allow you to purchase crypto through them.
Some people may opt to store their crypto in a more secure fashion than an online exchange: a crypto wallet. Storing your crypto yourself makes you less vulnerable to security breaches, but comes with some risks. Learn more about how to buy cryptocurrency.
If you’re looking to get exposure to the crypto market without directly investing in crypto itself, you can consider crypto stocks. These stocks don’t include actual crypto, but rather companies that are involved in the wider crypto market, such as those that create equipment used to mine cryptocurrencies or operate crypto exchanges.
You can also look into Bitcoin ETFs. These ETFs track the price of Bitcoin by holding a large amount of the currency itself.
NFTs
Nonfungible tokens, or NFTs, let you have a record as being the owner of an original digital file. That file can be a piece of digital art or an item from a video game, and each NFT is unique. NFTs have largely declined in value since 2021 when they were making headlines.
» Learn more about NFTs
3. Precious metals
Unlike many of the investments in this list, precious metals, such as gold and silver, have been considered valuable since humanity’s early days. That’s particularly helpful because it provides a long track record to assess their values. Precious metals can also sometimes function as a hedge against inflation in a well-diversified portfolio.
There are several ways to invest in precious metals. You can buy the metal itself, typically in the form of bullion (think bars or coins) or jewelry. Bullion may be tempting — who doesn’t want a bunch of gold bars or necklaces lying around? But it’s difficult to store and sell. You can also invest in gold stocks or other precious metal stocks, or gold ETFs.
4. Collectibles
Investing in collectibles, such as wine or fine art, comes with many of the difficulties of investing in bullion: It can be difficult to secure and store, and it can be difficult to sell. Unless you’re well-connected in a particular collector’s industry, finding a buyer for your antique sculpture or vintage muscle car when you’re ready to cash in may be challenging.
5. Commodities
Commodities are raw, physical products such as oil, wheat, gold or corn. Investing in commodities may have some overlap with a few of the other categories listed here. For instance, you can invest in commodity futures, or you can purchase precious metals, which are technically commodities. You can also buy commodity stocks or commodity ETFs.
6. Real estate
There are several ways to invest in real estate, including REITs, or real estate investment trusts, utilizing a real estate investing platform or purchasing actual property.
REITs
REITs are similar to mutual funds in that they are companies, but they specifically own, operate or finance income-producing properties, such as apartment complexes that generate rent. REITs must pay out at least 90% of their taxable income to shareholders in the form of dividends, creating a potential revenue stream for investors. As with stocks, you can purchase publicly traded REITs through a brokerage account.
Real estate investing platforms
Real estate crowdfunding investment platforms have made investing in real estate far more accessible for the everyday investor. These platforms combine your money with other investors’ money so you can access private REITs and private property investments that historically have only been available to accredited investors (though some of these platforms are also only open to accredited-investors).
Actual property
If you have the capital, you can invest in actual real estate properties. This option may be attractive to those who can afford the startup costs (such as a down payment and any upgrades) and prefer to invest in something physical. The downsides include the risk of putting so much capital into one property, having to pay someone to manage and maintain the property, or having to do it yourself.
7. Private equity
Private equity is exactly what it sounds like — equity that comes from private investors. Typically, the only way to access private equity is through a private equity firm, and the investments are often only open to accredited investors who can meet a very high minimum investment.
Benefits and risks of alternative investments
Alternative investment pros
Diversification. Diversification helps spread your risk out across different industries, sectors and geographies. If the tech sector is up and the oil industry is down, and you’re invested in both, you can smooth out the highs and lows of each. Alternative investments provide investment diversification, especially because they may have lower correlation to traditional investments.
Potential reward. This is obviously one of the most attractive parts of alternative investments: They have the potential to bring in big financial gains. But in order to realize those large gains, you have to pick the right investment at the right time. And people, even investing professionals, often get it wrong and lose money.
Access. Until recently, alternative investments were only available to accredited investors or those with a high net worth. Now, there are more ways than ever for everyday investors to get access to some of these investments.
Markets, demystified
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Alternative investment cons
High Risk. Alternative investments almost always carry more risk than traditional investments such as stocks or bonds.
Illiquid. With many types of alternative investments, you may not be able to get your money out right away.
Less regulation. Many alternative investments are less regulated by the SEC than traditional assets.
Storage. Some alternative investments, such as precious metals, crypto, and collectibles, come with the added difficulty of storing them.
Best alternative investment to stocks
The best alternative investment for you will depend on your existing portfolio. For most people, a well-diversified stock-based portfolio can help you build wealth over time. If your portfolio is already in good shape, and you’re looking for something more exciting to supplement with a small percentage, you can start to look at alternative investments’ historical returns in comparison to the standard market.
For example, the average stock market return, as measured by the S&P 500 index, is about 10% per year for the last 30 years. Some years are higher and some years are lower, but over time, S&P 500 index funds have returned about 10%, not accounting for inflation.
Knowing that, you can start to compare that to the performance of alternative investments. Since 1972, on average, the FTSE NAREIT All Equity REITs index has returned an 11.3% total annual return. That’s not to say that REITs always outperform the S&P 500, but it does show over fifty years of strong performance. If you were to add a REIT to your investment portfolio, it would also help diversify your holdings.
Since 1969, gold has had a median average closing price of about $384 per ounce, and in 2024, gold’s average closing price has topped $2,000 per ounce. That sounds great, but gold’s average annual return from the last 30 years was 6.7% — significantly less than either the S&P 500 or REITs. Gold can, however, serve as a hedge against inflation. Every investment has pros and cons. That’s why it’s so important to consider potential alternative investments against your existing portfolio.
The bottom line
Alternative investments can be exciting, and they can help diversify your portfolio, but they also come with particular challenges and risks. If you’re curious about alternative investments, it’s worth doing your homework to see how they might complement your existing investment portfolio. If you don’t already have an investment portfolio composed of more traditional assets, it may be better to focus on building that first.
Wednesday’s Consumer Price Index caused a brutally fast spike in mortgage rates. It wasn’t notable for taking us to exceptionally high levels (October 2023 was much higher), but it was one of the biggest single-day jumps. Either way, it easily took the average lender back to highest levels since November 2023.
Today was very tame by comparison although rates moved just a bit higher. The average lender is at the weakest levels since November 20th, 2023. This reality is at odds with many of today’s mortgage rate headlines which mention 6.88% as this week’s rate. So what’s the true story?
6.88% is a product of Freddie Mac’s weekly survey. What Freddie really means is that 6.88% was the 5 day average from last Thursday through yesterday. Moreover, Freddie’s survey doesn’t adjust for upfront discount points and several other loan features that can push rates down. Combined with the averaging methodology and lag, Freddie’s rate is frequently misleading for consumers who are trying to get a sense of where rates may be on any given day.
Please be very well assured and very certain that 6.88% is not today’s rate. While a mortgage lender could technically still quote such rates, they would not be able to do so without higher upfront costs (aka “points”). Based on our apples to apples approach, today’s rate would need to be 0.25-0.375% higher to be quoted with the same upfront costs as a rate from Tuesday (before the big spike).
Today brought only a modest increase by comparison. In both cases, the average lender would be in the 7.3’s for a top tier scenario. On a side note, our index does include a proprietary adjustment for points. 7.3’s can mean lenders quoting rates of 7.125, for instance, but with some additional upfront cost. It can also mean rates of 7.5% with lower upfront costs.
The calendar of potential drama is relatively quiet tomorrow. The next report of note is Monday’s Retail Sales. But even then, we’re really waiting for the beginning of May before we get more data with the power to truly challenge the suggestions of this week’s CPI.
Friday ended up being reasonably pleasant, but mostly uneventful. Gains were in place from the overnight session on a combination of European economic data and central banker comments. Geopolitical headlines may have played a role at times, and end-of-week position squaring probably had some impact as well. None of the above really matters in the bigger picture. Bonds lost a lot of ground this week as inflation remained higher than the market hoped. The end. Now we wait for the next big data with the power to change that bigger picture narrative and that means we’ll be waiting for next month’s inflation reports. It’s not that 2nd tier reports like next week’s Retail Sales or the following week’s PCE inflation are incapable of moving the needle, but they’d have a hard time moving it enough to shift a bigger picture trend.
Import Prices
0.4 v 0.3 f’cast, 0.3 prev
Export Prices
0.3 vs 0.3 f’cast, 0.7 prev
Consumer Sentiment
77.9 vs 79.0 f’cast, 79.3 prev
1yr inflation expectations
3.1 vs 2.9 prev
5yr inflation expectations
3.0 vs 2.8 prev
09:15 AM
Much stronger overnight with gains tracking European bonds. 10yr down 8.8bps at 4.502. MBS up 10 ticks (.31) in 6.0 coupons and 14 ticks (.44) in 5.5 coupons.
10:23 AM
modest push back from 9 to 9:30am, but more modest gains after sentiment data. 10yr down 10bps to 4.493. MBS up 3/8ths in 5.5 coupons and a quarter point in 6.0s.
04:51 PM
Super sideways into 2pm and slightly weaker after that. MBS still up 7 ticks (.23) in 6.0 coupons and 9 ticks (.28) in 5.5s. 10yr yields down 7.2bps at 4.521
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To reiterate the point made in today’s morning commentary, there was a mismatch between the size of the beat in the core inflation data (0.4 vs 0.3) and the size of the move in the bond market. This wasn’t a glaringly huge problem considering the February’s CPI beat resulted in about 15bps of weakness in the 10yr while today was “only” 18bps, but it just emphasizes the extent to which the market has increased its focus on this particular report. The afternoon’s 10yr Treasury auction added meaningfully to the weakness, and the Fed Minutes passed without a trace. Geopolitical headlines (vague warning regarding potential for Iran attacking Israel) helped modestly, and were the only other source of volatility after the auction.
Core mm CPI
0.4 vs 0.3 f’cast, 0.4 prev
Core yy CPI
3.8 vs 3.7 f’cast, 3.8 prev
08:29 AM
A hair stronger ahead of CPI with MBS up 3 ticks (.09) and 10yr yields down 2bps at 4.344
08:42 AM
Sharply weaker after CPI. MBS down 5/8ths of a point. 10yr up 13bps at 4.498.
10:42 AM
Flat at weakest levels over the past 2 hours. MBS down nearly 3/4ths and 10yr up 12.7bps at 4.492.
12:36 PM
drifting to weakest levels with MBS down 26 ticks (.81) overall and 10yr up 15bps at 4.515
01:46 PM
Additional weakness after 10yr auction with 10s briefly up to 4.568. Still up 18.6bps at 4.55%. MBS down a full point.
04:09 PM
coasting out near weakest levels. 5.5 coupons down just over a point. 10yr yield up 18.1bps at 4.546.
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Securing investment partners Especially early on in an investor’s career, teaming up with like-minded individuals that want to invest in real estate as a career as well can be a massive boost when it comes to mitigating risk. With investment partners, each party has less skin in the game and can afford to be a … [Read more…]