These Out-of-the-Mainstream Investments Might Be Your Jam, and Here's Why

Tired of the same old, same old? Rather than staring FAANG stocks in the face or monitoring your same portfolio on a daily basis (snore!) you might want to consider some other options to liven up your portfolio. 

As with any investment, consider your timeline and risk tolerance. Consider the underlying fundamentals of each company in which you invest. Investments can suck the life out of your portfolio if you jump headlong into an investment without doing the research. 

Note that we've included more than just "alternative" investments on this list — an alternative investment strictly considers asset classes that exclude stocks, bonds and cash and often sticks to just tangible assets. One on our list — cannabis — can include, for example, investing in cannabis stocks. So, with that caveat, let's dive into four investment types that may have stayed on your peripheral vision until now.

Peer-to-Peer (P2P) Lending

Peer-to-peer (P2P) lending, also called "social" lending, refers to financing that allows individual investors to lend money directly to people who need it. 

Peer-to-peer lending uses online software to match lenders with potential borrowers. A few examples of online options include LendingClub, Prosper and Peerform.

Those who want to borrow money fill out an application, which could include a credit check. Next, they take a look at their interest rate and move forward to the funding stage if that interest rate looks good to them. You, as an investor, would review the loan listing and decide whether you want to fund that particular individual's investment and various lenders would split the loan equally.

Borrowers would then repay their loan.

Simple, right? 

P2P loans come with risks, as you might see right off the bat. First of all, these loans are unsecured loans, which means they're not backed by any collateral, such as a home or vehicle, that you could take if the borrower doesn't make payments. Furthermore, when you invest in one single individual's loan, you don't diversify your investments. This can spell trouble for you as an investor. 

However, you can see high rates of return and build a portfolio with a number of investments if you choose (based on loan type, loan term and more).

Cannabis

Wanna hop aboard the cannabis investing train? Think you should've done so long ago?

Seeing the climbing acceptance of the green gold rush throughout the country might panic you a little bit if you haven't taken action. If you think you're late to the party because you haven't started investing in cannabis stocks, chill. 

So far, 18 states and Washington D.C. have legalized recreational marijuana. In addition, cannabis is legal for medical purposes in 37 states. States also continue to put measures related to the legalization of the drug on ballots across the country.  

Before you jump in feet first, consider the pros and cons of investing in cannabis, because even though it's not too late, you certainly want to be discerning. Keep Canada's experience in your sights: Profitability for most Canadian marijuana stocks have been like a rollercoaster. In addition, national efforts to legalize marijuana have so far made no major moves.

On the other hand, the cannabis industry shows great promise, and with it, great product diversity. ​​You can choose to invest in development plants for marijuana products, marijuana growers or other auxiliary products like hydroponics. For example, Scott's Miracle-Gro Co NYSE: SMG has taken advantage of adding cannabis companies to prop up its balance sheet.

Crowdfunded Real Estate

So not interested in removing carpet and replacing toilets in a rental property? 

It's okay. You might want to consider crowdfunded real estate, which can take far less energy and money. Crowdfunding platforms allow you to directly invest in real estate using small amounts of funding from a large number of investors. Popular crowdfunding platforms include Crowdstreet, DiversyFund, Fundrise and PeerStreet.

You can see the appeal: Crowdfunding allows you to diversify your income across property types, offers geographic diversification (there's nothing preventing you from investing in properties in Florida when you live in Minnesota) and offers a passive investment strategy. 

Now, the drawbacks. One potential disadvantage is that investing through a crowdfunding platform means that you could earn lower returns than what you would receive if you directly owned a property because you have to turn over a percentage of your earnings to the crowdfunding platform.

Another biggie: Real estate is an illiquid investment. Period. You can't sell it when you want it because the property must have a buyer, which can take a long time. You must invest with money that you can afford to part with.

Farmland

Ever considered investing in farmland? 

If you live in a state in which miles and miles of farmland surrounds you, you may have heard of your neighbors buying it up and renting the land to farmers. They collect a small bundle of money at harvest time. 

You can do this even if you live in a high rise apartment in the middle of Manhattan through a platform like FarmTogether. Farmland generates passive income through crops and general land value appreciation. The platform helps investors by partnering with agricultural industry experts and handles the tricky details such as lease prices, crop prices, crop types, water rights and more.

However, you can't easily sell the farmland (that liquidity problem again!) You can really only sell your portion once the company announces an exit strategy from your farmland. Only then can you tap into the cash from your investment. 

In addition, you may not know whether you're overpaying for land, which is why you may want to consider an ETF that invests in the agriculture sector instead. This way, many buyers and sellers give you a way to ensure a more reasonable price.

Think Through Other Options

The sky's the limit when it comes to other investment opportunities, including so-called alternative investments. As you know, you have far, far more options than just the ones on the list above. 

However, watch your risk tolerance and your appetite for illiquidity. You could lose your investment, or at least a substantial amount of money. 

The goal: Always look to create diversified portfolios with the option for attractive returns.