Written by Reginald Chan on June 20, 2020

4 Alternative Investments Investors and Analysts Should Know

Alternative investments have been on the rise and have become popular. Any investor and financial analyst would understand that traditional investment assets are cash in stocks and cash in bonds. They earn money through interest payments, dividends, or appreciation. Interest payments are usually gained from loans, where the interest would be the amount earned by the moneylender. Dividends are payments made to investors by private businesses that an investor may have shares or equity in.

Appreciation here refers to the increase in asset value. In general investing in securing your money with the expectation of having a benefit in the future. Experts are now telling you there are other ways to invest your money. If you are a high profile investor then you might consider having alternative options to invest in your money. 

Alternative investments, allow investors and analysts to diversify their financial portfolios. These investments could be in assets that are tangible or financial assets or private equity. Let’s have a look at these alternative investment methods:

Arts and Wine

Investing in the Art Industry has become one of the hottest investments in the world of business. And this proves that art can do more than just making a living or a working space aesthetic. Collectors of art like paintings or sculptures purchase these pieces along with the goal of adding investment to their personal accounting portfolio. Like traditional investments in bonds or stocks, the value of an art piece increases.

If the artist responsible for a certain piece of artwork that you invested in advances in his career and becomes successful, your investment will definitely grow because the cash value of his works will increase. Art investment is long-term, so you should be a patient investor. 

Similarly, wine investment focuses on the acquisition of products whose value increases over time. In this kind of investment, you are keeping purchased wine bottles and selling them in due time at a higher price. In deciding to invest in wines, you need to understand more details about the type of wine that you are investing in. Bear in mind that wines that have higher value are those that are rare or vintage.

Hedge Funds

Similar to other types of investment funds, such as mutual funds, hedge funds are a pool of investments from a limited number of investors. The investments are being managed by an investment manager who decides carefully and wisely where to invest the funds. This type of funds lets the investors engage into multiple assets and complex groups. While this type is known to have high returns, the rise of these funds is usually associated with bull markets found in the United States. Investors who can afford this, however should be cautious because not all are volatile and high-risk. Overall, hedge funds’ target is to minimize the risks and maximize profits. 

Peer-to-Peer Loans

During the past years, investors were looking for another way of investing because of the fact that savings and bonds continued to be a disappointment due to the slow market value growth. Until a wide range of opportunities were brought about by P2P lending, a new alternative and yield-seeking type of investment.

This is differentiated from bank loans because in the process, the middle man, which is “ the bank” in the traditional bank loan processes, is no longer involved. Rather than people investing their funds in a bank, they directly invest through a loan that is usually taken by money borrowers on p2p platforms. So when a borrower decides to apply for a loan from a peer-to-peer platform, the information from these platforms is given to investors, and this is where the investor decides where to invest in.

Cryptocurrency

Cryptocurrencies have been pretty much a hot topic in discussion over the past year. We have always heard stories of people who became millionaires over the night and on the other side people who have also lost big amounts of money who tried the risk of investing in cryptocurrencies.

If you are a smart investor, this alternative way can be profitable for you. To make a profit, you need to have a thorough research about it as well as the coins. If you have the proper knowledge, especially knowing more about the coins, then, you will know where to invest your money. Don’t just decide based on what other people talk about, but you need to be careful not just to gamble just to earn money. Making money in the crypto market is not a simple play, you will need patience and all the knowledge to be able to succeed with whatever decision you have.

With all these mentioned alternatives to investing, any investor should be very careful enough with making the right choice of where to invest. It is true that having alternative ways can make your portfolio keep earning for financial gains. You just need to make sure that this will be ready to take the risk and accept the fact that these can be longer terms of investing. You can always seek help and guidance from your financial adviser where needed.

Related read: Best tips you should know before investing in cryptocurrency.

Article written by Reginald Chan
A meticulous entrepreneur by nature, Reginald is a sought-after success coach, digital marketing consultant and TEDx speaker from Asia. Currently, he teaches others how to make money online for free.

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