7 Investments Beating Stocks Right Now
#4 - Lease Your LandReal estate prices are soft, so selling extra acreage now may not be wise. But if you live near an area of spotty cellular coverage or your family plot is located above a natural gas field, then you can put the land to work for you instead.
Cell tower leases are picking up as major carriers like Verizon (VZ) and AT&T (T) fight to upgrade their networks. Owners of well-situated areas can lease land or roof space to wireless companies for fees ranging from a few hundred dollars to a few thousand dollars a month.
Same goes for oil and gas deposits. Depending on the mineral resource, annual rentals can range from a few dozen dollars to hundreds of dollars per acre. And don't think you need to live in Texas to tap in -- rural areas of New York and Pennsylvania are rich with natural gas reserves.
The downside? For one, you have to get used to some new structures on your land. And in the case of resource wells, you're much better off retaining a lawyer to navigate oil and gas law. But it's hard to deny the appeal of just sitting there and letting your idle land work for you.
#5 - 10-Year T-NotesThose wise investors who jumped into Treasury notes with a 10-year maturity a decade ago have done very well. Interest rates in September 2000 were around 5.5%. The Dow, on the other hand, is off 7%, the S&P 500 has given up 26% and the Nasdaq is down 43% thanks to the tech bubble's burst. Ouch. Obviously rates are much lower now, so future returns look anemic for current investors. But if the market moves sideways or dips further, then a 3% return each year may not look too shabby. It's also worth noting that as recently as July 2007, investors could get as much as 5% yield on 10-year T-notes. Smart money was buying bonds before the financial crisis and could reap the rewards. So is smart money still buying bonds? Well, that is the real question. In May, before the sharp contraction in the markets, investors could have locked in nearly 4%. That may prove to be a good long-term return. But currently rates are south of 3% so the market has to stay very poor for the next decade -- and rates equally weak -- for such a move to be profitable.
#6 - Build America BondsThe Economic Recovery and Reinvestment Act -- known colloquially as "The Stimulus" -- created Build America Bonds. The goal was to reduce municipal bond borrowing costs via a federal subsidy. The first issues came out in April 2009 right after the market lows, and obviously didn't keep pace with Wall Street's surge in the spring and summer of that year. But over the long term they may prove wise investments. Some of the first BAB issues included a $250 million bond issue for the University of Virginia, with a 30-year maturity, a glowing triple-A grade from all three major rating agencies and a plump yield of 6.22%. Not bad, but the market's roughly 30% gain since April of last year outpaces that, and it would take a steep decline to bring the two to parity. But looking forward, Build America Bonds have been doing very well lately as the market has hit a wall. They yield more than the 10-year Treasuries and there's less fear of a default since the loans are in fact backed by Uncle Sam and the stimulus cash. For instance, just last week the North Carolina Eastern Municipal Power Agency priced $182 in 2021 debt at a 3.29% yield. That's over half a percentage point better than 10-year T-notes. And if you're not up for buying the bonds and want more liquidity, consider the PowerShares Build America Bond ETF (BAB). The fund is up 8% this year, compared with a slight decline for the broader market.
#7 - Parking LotsAkin to self-storage, parking-lot ownership can be very profitable if you have good management skills. You just buy a big hunk of asphalt with a shack and some meters on it, and collect the daily and monthly dues. In fact, most urban areas that have need for parking lots also boast parking-lot service firms, so you don't ever have to lift a finger. Annual returns of 6% to 8% are possible according to industry experts -- and best of all, in urban areas, the land can be very profitable development real estate down the road (presuming an economic recovery, of course). An added plus is that owners can raise rates easily so there's no fear of inflation and the ability to adjust quickly to keep business profitable. Then again, the risks should be obvious to anyone who has walked away from an ill-lit parking lot entrusting their vehicle to an "attendant" texting his friends as he watches a portable TV instead of the cars. Skimming off the top of an all-cash business is easy for untrustworthy employees, and potential liabilities for damaged Jaguars and Cadillacs abound. But if managed right, the steady cash from a parking lot can keep you smiling and return more than your brokerage account in the years to come.
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