Alternative Investments in Canada: Types, Risks & How to Invest

Tired of low returns and market volatility? Alternative investments—like gold, crypto, REITs, and private debt—offer new ways to grow your wealth. But are they worth it? With higher risks and fewer regulations, they’re not for everyone. Learn how they work and the best options for Canadians. Ready to explore new opportunities?

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What are alternative investments?

Alternative investments are things you can invest in besides stocks, bonds, and cash. They include real estate, gold, crypto, private debt, and collectibles. These investments can offer big rewards but also come with higher risks and fewer rules. Many wealthy investors use them to grow and protect their money.

Types of alternative investments

  • Gold

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    What it is: A precious metal used as a store of value and hedge against inflation

    How to invest: Buy physical gold (bullion, coins), gold ETFs, gold mining stocks, or gold futures

    Pros: Inflation hedge, historically stable, easy to buy

    Cons: No passive income, can be volatile, storage costs for physical gold

    Risk level: Low to moderate (depends on market demand and economic conditions)

  • Cryptocurrency

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    What it is: Digital currency secured by blockchain technology (e.g., Bitcoin, Ethereum)

    How to invest: Buy on crypto exchanges, invest in crypto ETFs, stake coins for passive income

    Pros: High growth potential, decentralized, easy to trade

    Cons: Highly volatile, security risks, regulatory uncertainty

    Risk level: High (prices can fluctuate dramatically)

  • REITs (Real estate investment trusts)

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    What it is: Companies that own income-producing real estate, like apartments, offices, or malls

    How to invest: Buy publicly traded REITs, private REITs, or REIT ETFs

    Pros: Passive income, lower entry cost than physical real estate, liquid if publicly traded

    Cons: Sensitive to interest rates, lower control over assets, private REITs can be illiquid

    Risk level: Moderate (depends on property market conditions)

  • Commodities

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    What it is: Physical goods like oil, natural gas, wheat, and metals that are traded in global markets

    How to invest: Buy commodity ETFs, futures contracts, or invest in commodity-producing companies

    Pros: Inflation hedge, demand-driven value, diversification

    Cons: Prices affected by global supply/demand, storage costs for physical commodities

    Risk level: Moderate to high (depends on market conditions and geopolitical events).

  • Private Debt

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    What it is: Loans made to businesses or individuals outside traditional banks, often through private lenders

    How to invest: Participate in peer-to-peer lending, private credit funds, or structured debt investments

    Pros: Higher yields than traditional bonds, diversification, fixed income potential

    Cons: Illiquid, credit risk, longer lock-up periods

    Risk level: Moderate to high (depends on borrower creditworthiness)

  • Collectibles

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    What it is: Physical assets like art, rare coins, wine, classic cars, or sports memorabilia

    How to invest: Buy and hold valuable items, use auction houses or online marketplaces

    Pros: Potential for appreciation, tangible asset, passion investment

    Cons: Illiquid, hard to value, requires expert knowledge

    Risk level: Moderate to high (depends on rarity and demand)

  • Venture Capital (Private Equity)

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    What it is: Investments in early-stage startups or private companies with high growth potential

    How to invest: Direct investment, venture capital funds, angel investing

    Pros: Potential for massive returns, early access to high-growth companies

    Cons: High failure rate, long investment horizon, limited liquidity

    Risk level: High (most startups fail, but winners can deliver huge gains).

Access for Retail Investors (i.e. you)

Traditionally, these investments were only available to accredited investors — those with high income or net worth. Now, you can access alternatives through ETFs, online platforms, fractional ownership and fintech solutions.

How to invest in alternative assets

Investing in alternative assets varies in difficulty. Some, like venture capital and private debt, are harder to access because they require high capital, long lock-up periods, or accreditation. However, new fintech platforms, fractional investing, and ETFs now make it easier for everyday investors to buy into real estate, crypto, commodities, and even private equity.

Best alternative investment platform to get started

Why use Wealthsimple for alternatives investments
  • Zero-commission stock and ETF trading – No fees on Canadian trades
  • Easy-to-use app with sleek design – Perfect for beginners and active investors
  • Access to crypto, private equity, and REITs – One-stop shop for alternative assets

Wealthsimple offers a broad range of investment options beyond traditional stocks and ETFs. Investors can trade stocks and ETFs commission-free, making it a cost-effective option for self-directed investing. Wealthsimple crypto gives you access to cryptocurrency ETFs and well as over 70 crypto coins.

You can diversify your portfolio with REITs and alternative ETFs, making it easier to access real estate and other asset classes.

For those looking beyond public markets, Wealthsimple recently introduced private equity investments, partnering with global firms to give Canadians exposure to high-growth private companies — something historically reserved for institutional investors. A

Other platforms worthy of a look

Are alternative investments worth it?

Alternative investments can diversify your portfolio, hedge against inflation, and offer higher return potential. However, they often come with higher risk, less liquidity, and more complexity than traditional investments. Whether they’re right for you depends on your risk tolerance, investment goals, and time horizon.

Pros

Pros

  • Diversification – Alternatives reduce reliance on stocks and bonds

  • Inflation protection – Assets like gold and real estate hold value over time

  • Higher return potential – Some alternatives outperform traditional investments

Cons

Cons

  • Less liquidity – Harder to sell quickly compared to stocks

  • More complexity – Requires research and understanding of risks

How to start investing in alternative assets

  • Low risk: Start with REITs, gold ETFs, or alternative ETFs for easy diversification.
  • Moderate risk: Consider private debt, commodities, or crypto ETFs.
  • High risk, high reward: Look into venture capital, private equity, or direct crypto investments.

FAQ

  • What is alternative investment management?

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    Alternative investment management refers to the strategies and processes used to oversee and optimize investments outside traditional stocks and bonds. This includes managing private equity, hedge funds, real estate, commodities, and venture capital. These assets often require specialized expertise, as they are less regulated, less liquid, and involve higher risks than conventional investments.

  • Is a hedge fund an alternative investment?

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    Yes, a hedge fund is considered an alternative investment. It pools capital from investors and uses diverse strategies — such as long/short positions, derivatives, and leverage — to generate returns. Hedge funds often target high-net-worth individuals and institutions due to high fees and minimum investment requirements. They aim to outperform traditional markets but come with higher risk and limited liquidity.

  • Are derivatives alternative investments?

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    Yes, derivatives — such as options, futures, and swaps — are often classified as alternative investments. They derive value from underlying assets like stocks, commodities, or currencies. Investors use them for hedging, speculation, or leverage. While derivatives can enhance returns, they are complex, carry significant risk, and may not be suitable for all investors due to their volatility and leveraged nature.

  • What are liquid alternative investments?

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    Liquid alternative investments are funds that offer exposure to alternative assets but maintain higher liquidity, allowing easier buying and selling. Examples include hedge fund-style mutual funds, alternative ETFs, and REITs. These provide diversification and hedge against market volatility while remaining more accessible to retail investors than traditional private alternative investments.

  • What is the most popular alternative investment?

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    Real estate is one of the most popular alternative investments. It offers tangible value, long-term appreciation, and income through rental properties or REITs. Gold and cryptocurrency have also gained significant popularity, particularly as inflation hedges. Private equity and hedge funds remain top choices for institutional and high-net-worth investors seeking higher returns.

Tyler Wade Personal finance content strategist & writer

Tyler Wade has worked in personal finance for over 5 years writing for brands like Ratehub, Forbes, KOHO, and now Money.ca.

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