Interested in exploring alternative investments as a way to diversify your portfolio? Keep reading to learn more about the types of alternative investments available and how you can start investing in each.
What Are Alternative Investments?: Most people realize that investing is an important part of planning for short- and long-term financial success. Wise investing grows wealth, which leads to greater financial independence. Profits realized from smart investing can generate passive income, which can allow you to retire comfortably, retire early or both.
Many traditional and alternative investment opportunities exist to achieve these goals. Although stocks and bonds may get the lion’s share of attention in the press, alternative investments can build wealth just as effectively as the market.
What is an alternative investment? An alternative investment is considered as anything besides traditional securities like stocks, bonds and mutual funds.
Why Invest in Alternative Assets?: The farmer’s adage that says “don’t put all your eggs in one basket” applies on the farm and on Wall Street.
Although the stock market has performed well on average over time, investors have been ruined by only investing in a single company or sector that crashed.
Institutional investors and pension funds have well-thought-out, well-executed diversification strategies. This process usually involves acquiring a mix of traditional investments, tangible assets and real property, as opposed to just investing in stocks and bonds.
Fund managers who don’t diversify portfolios could almost be accused of negligence. The same thing holds true for the individual investor.
It’s possible that in one horrific day of trading (take Oct. 19, 1987’s Black Monday, for example), even an investor with a diverse stock portfolio could be ruined.
However, an investor with a diverse portfolio of alternative assets could be much better equipped to ride out the storm than an investor who only has stocks. No investment portfolio is complete if it’s not diversified across a number of different asset classes. That’s why making wise alternative investments is so important.
Types of Alternative Investments
Real Estate: Real estate is historically one of the highest performing alternative assets. Ironically, although real estate is considered an alternative asset, it’s where most everyday Americans have the bulk of their wealth concentrated.
However, owning your own home is not the only way to invest in real estate. Now that the price of property has skyrocketed in most major metro areas, buying homes can be out of reach of many Americans. Fortunately, they can still make …….