Five unconventional investment strategies to maybe check out…maybe not…I guess we’ll see!
The day was March 24, 2022. Russia had (devastatingly) invaded Ukraine one month prior, COVID was still all around us although mandates and restrictions were easing up, Canada’s Liberal and NDP parties had just struck some quasi coalition-like pact. I logged in to my business bank account. It was looking healthy-ish. So, I decided to pull the trigger on something that I had been wanting to do for some time — explore some of the more unconventional investment strategies out there. And then check in regularly to see how they are doing, and report back to those who too, might be interested in seeing what other potential return-delivering vehicles exist beyond ho-hum stocks and bonds.
Disclaimer: this is not financial advice. Rather just the wacky adventures of someone who dreams that elusive passive income dream.
Okay, this one isn’t weird. But it is necessary from a benchmarking perspective. Stick with me, I promise my investment journey gets weirder.
Warren Buffet once said, “if you’re emotional about an investment you’re not going to do well.” Given the reputation that robots have for being emotionless drones (apologies in advance to any future deeply feeling robots that might read this), I figured the best place to start our benchmark was with a roboadvisor, specifically WealthSimple.
So, I kicked off my mission of madness by purchasing what Bankrate had declared was one of the top performing equity ETFs for March 2022 — iShares Core S&P 500 Index. I purchased 10 shares at $48.43 each, for a total of $484.30CAD.
Now to sit back and watch the magic.
Crowdfunded real estate
Fundrise is the most well-known real estate crowdfunding platform around, but they don’t operate in Canada. Fine, whatever, their chilly loss. So, I went a-searching for a Canadian option and came across addy.
Rising Canadian real estate prices and bidding wars have been dominating the headlines for months, so this seemed like a clever, and affordable, way to break into what has become a cost prohibitive market.
Being Alberta-based, I had my choice of two properties:
· A 96-unit, 100% affordable housing property in Hamilton, Ontario
· A two-storey, heritage designated building with residential and commercial units in Vernon, BC
In the spirit of the assignment, and it’s ‘hey, why the fuck not?’ mindset, I bought in to both.
The Addy membership cost of $26.25, I bought 250 shares of each, and $526.25 later I was the proud owner of what probably equates to a brick, or, like a square of tile, in each property.
Care to explore addy yourself? Use this link and get $25 to start with.
Who knew LEGO could be good for more than just hours of zen building fun? A recent study published in Research in International Business and Finance claims that retired LEGO sets generate higher returns than gold, stocks, and bonds. Just consider the Millennium Falcon set that was first released in 2007 for $642.03 and today is going for $2,399.99 on eBay. So, off the LEGO store I went to put this theory to the test.
I know we’re not supposed to let emotion seep into our investment making decisions. I know this. But we’re talking about LEGO here. And so I avoided buying any sets that I just have zero interest in building (ya, Ninjago, I’m looking at you). That way if these bricks don’t appreciate like I am hoping, I’ll likely just keep the sets and build them, so, that possible eventuality factored into my purchasing decision-making. I have no doubt that Warren Buffet would disapprove of this approach, but there we have it.
LEGO investor know-it-alls advise going for limited edition sets that are likely to be retired. Sets with a nostalgic tone tend to do well. And sets must be kept sealed and in pristine condition. With this in mind, I thoughtfully selected the following sets:
· The Ahsoka Tano Brickheadz figure (164 pieces) for $12.99
· The adidas Original Superstar sneaker (731 pieces) for $109.99
· The police station modular building (2,923 pieces) for $269.99
· The Nintendo Entertainment System (2,646 pieces) for $299.99
· LEGO threw in a complimentary Easter Bunny set for spending more than $250 — thanks LEGO!
Bringing the total investment to $727.61 CAD (including GST). Or $0.11 per brick.
There is no doubt that a nice, crisp glass of Chardonnay belongs in a great number of places. Alongside a nice seafood meal. On a patio on a warm day. In my belly. But as an asset class in my investment portfolio? This I had to explore deeper. And it turns out that wine investing is a thing. A thing that has consistently outperformed the S&P 500 over the past 25 years. A thing that wine investment platform VinoVest claims is more stable than gold. A thing that delivered a return on investment of 8.04% of the VinoVest 100 in 2021.
And thus, wine made it into my unconventional investing spending spree. After all, I’ll need something to sip someday while I am building my LEGO sets if this little experiment of mine goes horribly wrong.
I opted for the $1,000 managed account option, in which you leave the portfolio management up to the expert wine sommeliers and the VinoVest algorithm to manage on your behalf. And I went for the aggressive investing plan, because that is just how I roll. I am now the proud owner of six bottles of Domaine De La Vougeraie, Chambolle-musigny 2018. Which has “an attractive, floral bouquet of pressed rose petals infusing the red berry fruit, quite mineral-driven and impressively precise. The palate is medium-bodied with fine tannins, the 40% whole-bunch fruit nicely integrated.” Sounds like the next Amazon to me!
If you too would like to explore wine investing, feel free to use my referral link and get three free months of wine storage and management.
Be the Bank
This investment option gives me a bit more of the warm and fuzzies than some of the others on this list (ahem, wine investing). The peer to peer (P2P) lending industry started in 2005 with the launch of Zopa in the United Kingdom. There are now several P2P platforms around the world, and they serve the function of bringing together those with money to lend with those who are in need of funds to borrow. Similar to with more traditional lending options, AKA banks, there is a loan application process. Overall, P2P is a more accessible form of borrowing, and the interest rates tend to be lower than with the banks. P2P investors are drawn to it because of the potential for higher returns when compared against other investment options.
But, who doesn’t like playing Santa Clause? So, I deposited $1,000 with goPeer, a Canadian platform that promises to connect me with “creditworthy Canadians looking for a loan” and was off to the races. The twenty loans I funded included one to a production logistics coordinator looking to refinance his or her credit card, someone from the insurance industry looking to consolidate some debt, and someone from Ontario looking to finance their wedding.
Here is a snapshot of my goPeer investment portfolio.
I like pretty colours, so this makes me happy.
Interested in playing Santa yourself? Use this referral link and get $30 free to get you started.
Remember COP26? The international climate change conference that took place in Glasgow last fall? There were some mighty lofty goals set at COP26, including the following:
· Secure global net-zero by mid-century and keep 1.5 degrees within reach;
· Adapt to protect communities and natural habitats; and
· Developed countries must make good on their promise to mobilize at least $100 billion in climate financing per year
Given this aggressive (and necessary) commitment to emissions reduction, it felt prudent to explore an investment vehicle that aligns to this future reality around climate change action. Enter carbon credits.
Carbon credits are like a permission slip for emissions from organizations. Investopedia gives a great description:
A carbon credit is a permit that allows the owner to emit a certain amount of carbon dioxide or other greenhouse gases. One credit permits the emission of one ton of carbon dioxide or the equivalent in other greenhouse gases.
The carbon credit is half of a so-called “cap-and-trade” program. Companies that pollute are awarded credits that allow them to continue to pollute up to a certain limit. That limit is reduced periodically. Meanwhile, the company may sell any unneeded credits to another company that needs them.
Private companies are thus doubly incentivized to reduce greenhouse emissions. First, they must spend money on extra credits if their emissions exceed the cap. Second, they can make money by reducing their emissions and selling their excess allowances.
Negotiators at COP26 agreed to create a global carbon credit offset trading market, making this a relatively new opportunity. And Canada’s first carbon credit ETF (Horizons Carbon Credit, trading as CARB: TSX) just began trading in February. So off I went and purchased 100 shares at $9.78 each for a total of $978.00.
It is an interesting time to pull off this little investing experiment indeed. Inflation is on the rise. Bond markets are taking a hit. So, why not indulge in a little creative investing? And now I just sit, wait, and let these investments run their course. While providing annual updates. With colour charts. Go, passive income, go!! Or, more accurately, grow, passive income, grow!!