Alternative investments are not like your everyday investment. They are not as liquid and do not materialize as quickly as conventional investment types. Nonetheless, alternative investments are becoming more and more popular day by day. Any investment that does not fall under bonds, cash or stocks is an alternative investment.
Most financial experts will tell you that alternative investments are particularly good for diversification. You are supposed to depend primarily on them as a diversification tool for financial portfolios. So instead of putting all of your investment in traditional assets, you can venture into alternative investments. So what are some of the assets that fall under alternative investments? Well, here are 6 that you can consider investing in:
Historically, art has been one of the most sought after objects in the world. In most cases, it is the well-to-do and wealthy members of society who invest in expensive works of art. Fine art can be a great investment for you. Good thing about art is that its price does not fluctuate as much as traditional forms of investment. In fact, its value has been steadily increasing at an average of 10.5% per year.
Nevertheless, art has its distinct changes which can also make investing risky. It also depends on the type of art you are interested in, as that will determine how much you are going to spend.
The purchase of automotive machinery is one of the most volatile investments than you can ever do. This is not only unpredictable, but there are also a multitude of natural disasters and global events that can affect them. These natural events can impact both the price and the safety of the assets.
Let’s say you buy a vehicle and a weather disaster strikes. There will be damage, which may make it unnecessary or lead to expensive repair costs. However, for such goods, you can also purchase insurance coverage for them.
This is another risky, but quite profitable, alternative investment that you can make. The rise and popularity of cryptocurrencies is evident with the presence of bitcoins and the like. Investing in cryptocurrencies can be very profitable if you do it right.
However, cryptocurrencies always come with obvious risk whenever the market changes. There are fluctuations just like when you invest in any other type of business.
Investing in jewelry is wise and smart to do when you know where to get it. You should also analyze and understand the market well before you immerse yourself in the business.
In this area, you must also be careful not to get changed when buying jewelry. You can easily buy fakes thinking you have the right set of jewelry.
There are different types of jewelry that you can invest in. For example, you can invest in both diamonds and its alternatives like moissanite. It can be a good investment if you are smart and patient. The market changes and you will sometimes have to hold onto your jewelry until it is the right time to sell it.
Otherwise known as venture capital, startups are a great way to invest your money. Have you ever watched the American TV show Shark Tank? Or the British TV show Dragon’s Den? Both show you how investors invest funds in start-ups and even established, in the hope of later earning profits / returns. Startup owners are going out there and pitching their business ideas in the hopes of making deals with investors.
Investing in startups as in the above cases involves funding the early stages of a business. Later, you can get your investment back when the company issues shares or when another company takes over. The return on investment for startups usually doesn’t happen for a decade or so, if the business is successful.
Due to the stage at which you make an investment, these types of investments are normally considered very risky. However, if you spread your capital among different startups, you can significantly reduce the risk.
These 6 assets above are great alternative investments if you are looking for one. However, you have to make smart and calculated decisions because of the risk that exists.
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