🌎 Compare Best Alternative Investments

💡 What is an alternative investment?

An alternative investment is an investment in any asset class other than conventional categories, such as stocks, bonds and cash. These can include but aren’t limited to:

• Hedge funds.
• Private equity.
• Tangible assets like real estate, fine art and vintage bottles of wine.
• Cryptocurrency.
• Private lending.
• Artwork
• Collectibles
• Commodities
• Derivative contracts
• Hedge fund investments
• Private equity
• Real estate
• Wine
• Venture capital

Basically, if it isn’t stocks, bonds or cash and you can invest in it, it’s an alternative investment.

📚 How to invest in alternative investment?

Technological advancements have made it easier than ever to invest in alternative assets, and new markets continue to emerge. Here are two ways you can invest:

• Direct investing: This is when you purchase a physical asset, such as a vintage car or precious metal, and take hold of it directly.
• Indirect investing: This typically involves investing through an intermediary, such as a private equity firm or hedge fund.

Investors looking to retire can consider self-directed individual retirement accounts (IRAs) to invest in alternative assets. These IRAs are designed to accommodate assets that most traditional IRA custodians do not permit.

The easiest way to invest in alternative assets is through online platforms that connect investors with these types of investments. You can find the most popular alternative investment platform on this page.

🎖️ Advantages of alternative investments

• Alternative investments can provide diversification to a portfolio, reducing market risk and potentially maximizing overall returns.
• These assets may offer the potential for bigger returns than traditional investments, although they may also come with higher risk.
• Investing in alternative assets can provide interesting and exciting opportunities outside of stocks and bonds, such as vintage cars, real estate, and cryptocurrencies.
• Terri Spath, founder of investment advisory firm Zuma Wealth, notes that alternative investments have a low correlation to stocks and bonds, making them particularly advantageous in markets where conventional investments are underperforming.
• According to Robert R. Johnson, professor of finance at Creighton University, alternative investments offer diversification and potential for higher returns.

🔐Risks of Alternative Investments

Alternative investments offer potential diversification and higher returns, but they come with unique risks:

• Lack of regulation: Many alternative assets aren’t regulated by the SEC, which means they don’t have the same safeguards as traditional investments. This can lead to an increase in fraud, especially if the investment is complex.
• Liquidity: Alternatives are known for being relatively illiquid compared to traditional investments. Even if an investing platform or firm has a secondary marketplace or allows cash outs, liquidity might not be guaranteed.
• High illiquidity: Some alternative assets lack a secondary trading market or tend to be illiquid because of their complexity and difficulty in valuing them. Others have lock-up periods that prohibit investors from accessing their money, should they need to sell. With some alternatives, it could be years before you can sell out and liquidate the asset.
• High volatility: There are no guarantees in any investment, but alternative assets can be especially volatile and produce large variations in returns.

Investors need to spend time doing their homework and understanding the potential risks involved in alternative investments. While these assets offer potential benefits, investors need to be aware of the unique risks associated with them.

🚁 Active vs Passive Investing

High or low fees may be paid by active investors. Traditional brokerages typically charge higher fees per trade for active investors than modern online platforms, which charge lower fees.

Passive investors aim to match the market's return and keep costs low. They engage in less buying and selling and may opt for "set it and forget it" investing or a "lazy portfolio."

Semi-passive investors, who use traditional brokerages, may be charged commissions and management fees, while those who rely on independent or self-managed tools can enjoy low or no fees when investing online. This approach can offer tax efficiency since passive investing typically incurs lower yearly capital gains tax.

Passive investors may use dollar cost averaging, contributing equal amounts to their investment portfolios at regular intervals. This approach results in purchasing more shares when prices fall and fewer shares when prices rise.

Index investing is another passive approach in which investors seek returns that mirror the performance of an index by buying shares of an ETF fund that tracks the index.

💵 Can you get rich from Alternative Investments?

Yes, it is possible to get rich from alternative investments. In fact, many successful investors have built their fortunes through alternative assets such as real estate, private equity, and venture capital. However, it is important to keep in mind that alternative investments come with unique risks and require careful research and due diligence before investing. It is also important to have a well-diversified portfolio that includes both traditional and alternative investments to manage risk and maximize returns.

🔮 The Future of Alternative Investing

The Future of Alternative Asset Investing Creating a diversified portfolio is not a one-size-fits-all approach, and no investor can predict the future of the market or the world. However, with the inevitable volatility of investing, it's not surprising that alternative asset investing has steadily risen as investors seek ways to protect and grow their wealth. The emergence of crowdfunding companies and technology has made it possible for anyone to start investing, regardless of their net worth.

While traditional investments like stocks, bonds, and cash are unlikely to disappear anytime soon, there are clear advantages to having a robust portfolio that includes alternative assets. This could provide downside protection or the potential for outsized returns.

Ultimately, the decision of how much of your portfolio to allocate to alternative assets depends on your goals, risk tolerance, and personal interest in exploring these investment opportunities. Fortunately, investing in alternatives has never been easier thanks to crowdfunding platforms and technology. However, it's essential to conduct thorough research and due diligence before making any investment decisions.