Written By:
Max Michalczik CFP® | Space & Defense
Kekoa Pfau ChFC® | Space & Defense

If you work in space, defense, or tech, there’s a decent chance your compensation already comes with equity attached. RSUs, stock options, an ESPP, maybe all three. That means your portfolio may already be heavy on your employer’s stock before you’ve invested a single dollar on your own.

That’s a concentration problem. And the answer isn’t always more stocks.

The investments below aren’t exotic. They’re just less talked about in the context of high earners in your industry. Some of them may fit your situation. Some may not.  However, understanding what’s out there is the first step to building a portfolio that doesn’t just mirror what you already have.

A quick note before we get into it: most of these fall into the category of “alternative investments.” That term means they’re not traditional public stocks or bonds. Alternatives generally have low correlation to public markets, which is exactly the point. When the S&P drops, you don’t necessarily want everything else to drop with it.

1) Real Estate

Real estate is the most accessible alternative for many people. You can start with a single rental property, scale into multi-family, or go completely passive through a real estate investment trust (REIT) or a private real estate fund.

The appeal is straightforward. Real estate can generate rental income, appreciate over time, and provide tax advantages through depreciation. It also tends to move independently of equity markets, which is the whole point.

The tradeoff is that direct real estate is illiquid and management intensive. A REIT trades like a stock and solves the liquidity problem, but you give up some of the tax benefits and direct control. Private real estate funds sit somewhere in between.

2) Private Equity

Private equity means investing in companies that aren’t listed on a public exchange. This can include early-stage startups through venture capital, or more established private companies through buyout funds.

For people in the space and defense world, private equity in adjacent sectors can be a way to put capital to work in an area you understand. You’re not guessing at consumer trends or retail dynamics. You may have real insight into which technologies and companies have staying power.

The catch is that private equity is illiquid, usually locked up for five to ten years, and typically requires accredited investor status. Minimum investment thresholds have come down over time, but this is still not a casual investment.

3) Private Credit

When companies can’t borrow from a traditional bank or issue public bonds, they borrow from private lenders. This is private credit, also called private debt or direct lending.

For investors, this looks like a fixed income investment with higher yields than most traditional bonds, specifically because the borrower is paying a premium for access to private capital. The income can be attractive, particularly in higher interest rate environments.

Private credit tends to be less correlated to public equity markets than traditional bonds. It’s illiquid and requires accredited investor status, but for someone looking to generate income outside of the stock market, it’s worth understanding.

4) Real Assets and Commodities

Real assets include things like commodities, infrastructure, timber, and farmland. These investments derive their value from physical properties or natural resources rather than cash flows from a business.

Commodities tend to act as an inflation hedge. When inflation rises, the cost of raw materials often rises with it. That can make commodities a useful counterbalance in a portfolio that’s otherwise heavy on equities.

Most individual investors access commodities through ETFs or mutual funds rather than buying futures contracts directly. Infrastructure and farmland funds have also become more accessible to non-institutional investors in recent years.

5) Business Ownership or Angel Investing

This one is less structured than the others, but it’s worth including because it’s something a lot of high earners in tech and defense utilize.

Investing in a small business, whether as a silent partner, a co-owner, or an angel investor in an early-stage company, can generate returns that have nothing to do with what the S&P 500 does on any given day. It can also generate meaningful losses, which is why it fits better as a small allocation than as a core strategy.

For people with deep domain expertise in aerospace, autonomy, cybersecurity, or advanced manufacturing, angel investing in adjacent companies is one area where your professional knowledge is a genuine edge.

6) Structured Products

Structured products are financial instruments designed to offer a specific return profile, often linked to an underlying index or asset, while incorporating some level of downside protection.

A common example is a buffered or principal-protected note. You might agree to cap your upside at a certain return in exchange for protection against the first 10% or 20% of losses. These aren’t right for everyone, and they come with their own complexity and fees. But for someone who is sitting on a large, concentrated equity position and wants to stay invested while reducing downside risk, they’re worth understanding.

Structured products are not simple. Before using one, make sure you understand exactly what you’re buying, what you’re giving up, and what conditions have to be true for it to work as intended.

7) Collectibles and Hard Assets

This is the category that covers everything from fine art and wine to watches, coins, and classic cars. It used to require significant capital and specialized knowledge to participate. Technology has changed that. Platforms now exist that allow fractional ownership in individual pieces or collections.

Collectibles are highly illiquid, difficult to value, and carry real storage and insurance costs. They’re not a replacement for a diversified portfolio. But for someone who has a genuine interest in a category and wants exposure to an asset class that moves completely independently of financial markets, a small allocation can make sense.

The key word is small. This is a satellite holding, not a core one.

To Conclude, Investment Options for Space, Defense, and Tech Employees That Aren’t the Stock Market

The goal of diversification isn’t to avoid the stock market entirely. It’s to build a portfolio where not everything moves in the same direction at the same time.

For space, defense, and tech employees who already have significant equity exposure through their compensation, that means being intentional about where additional investment dollars go. The options above won’t all fit your situation. But knowing they exist is the starting point.

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This content is for educational and informational purposes only and should not be considered personalized investment, tax, or legal advice. The information provided is general in nature and may not apply to your individual circumstances. All investments involve risk, including the potential loss of principal.
The Freyr Group, LLC does not provide legal or tax advice. Any references to tax-related topics are provided for general informational purposes only, and individuals should consult with a qualified tax professional regarding their specific situation.
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