7 Alternate Investment Options for Savvy InvestorsBy
Akhila Masapogu, 03-Mar-2020
Since ages, investors have stuck to the good old low-risk and decent returns vehicles. These investments have just helped to shield from the inflation wrath, rather than bringing profits. Finding the right balance between the profits and risks has always been a little tricky. Stepping out of the comfort zone and exploring unconventional options will help to tackle this situation. Alternative investments opportunities are a great way to diversify the portfolio, and to diversify the risk involved.
Features of an Alternate Investment
Alternative investments can help investors to make more money than traditional options like gold, stocks, and bonds. Also, alternative investment funds allow experimenting with risk, ticket sizes, and tenures.
There are few alternative funds that cover up the loopholes of traditional options, such as, private equity funds which are alternative property investments that are conceptualized to democratize Real Estate. Some key features of the alternative investments opportunities are:
- Investors get to diversify their portfolio.
- Alternative opportunities yield higher profits than traditional vehicles like stocks and bonds but also have higher risks associated.
- Comparatively, these are less liquid than the usual investments.
- Both institutional and noninstitutional players can invest in alternative investments.
So, following are some of the worthy alternative investment options.
Diamonds and Antiques
Diamonds, the most loved stones of the world are also one of the most preferred alternative funds. The appreciation of these gemstones over time is very high.
Investors can directly invest by buying diamonds or can indirectly buy shares of any diamond mining firm. Diamonds have proven to be very rewarding when considered for investing and the market has shown steady growth. The important factor that decides their performance is the quality of the diamonds.
Antiques are one of the most unconventional ways of making money. Art, jewelry and other vintage things that have a value are considered as antiques. Investors can make a good amount of profits investing in the right kind of antique stuff.
Antiques also have a fluctuating market just like any other conventional investment. Collecting valuable antiques with high demand and low availability will fetch the investor more profits. Low Liquidity and less available buyers are a few drawbacks of investing in Antiques.
Wine along with being the best drink for many is one of the best investments for making a fortune. Investing in fine wine is benefited by high profits if given enough time. Age like a fine wine- heard the saying? Just as it says, for wine to become fine it requires a lot of time, the same implies for investment here.
Investment in wine is risky like many other alternative investment funds. Along with budget and time, investing in wine also requires a lot of patience. The investor should be backed by solid research and keep out an eye for the wine from the best vineyards.
A quality vintage wine is something that never goes out of demand. Investing in larger bulk often yields higher profits.
Digital currencies had a lot of hype earlier which came to an end with the market downfall in 2018. But the market picked up again, and today the investors consider the cryptocurrency alternative investment as a potential aid for building wealth.
There are lots of cryptocurrencies apart from the most famous Bitcoin. Even though there is an increased interest from investors, there is no regulatory authority for the cryptocurrencies. Interference of government authority will bring in the long due structure, and help in strengthening the existing system of cryptocurrency alternative investment.
The potential to generate high profits with less budget and relaxed process without involvement of any restrictions and rules makes cryptocurrency alternative investment funds the best.
Peer to peer lending(P2P) firms have revolutionized lending and borrowing by removing the middlemen. P2P platforms bring together the potential lenders and borrowers, thus money is exchanged, without the involvement of banks or any brokers. These platforms are beneficial than traditional financial institutions as the borrowers get loans for a lesser interest and buyers can earn more profit in a short time.
These are short term loans and investments start with the minimum budget allowing any investor to invest in P2P. These firms also have options with varying degrees of risk and investors can choose according to their risk tolerance.
Private equity is an alternative investment fund that pools money and invests in unlisted private companies. Unlisted private companies that require huge capital, raise funds in the form of private equity without issuing any debt instruments.
These firms invest in different sectors like startups, Real Estate, venture capital, etc. Both institutional and non-institutional investors who are looking to add a risky investment to their portfolio can invest in PE. Investors get capital appreciation and return depending on how the investment performs and the firm also collects a certain percentage as a management fee.
These investments are usually long term and range between 3-7 years and after the tenure investor can exit from the fund.
Assetmonk is a private equity platform that allows alternative property investment in high growth potential Real Estate properties.
Hedge funds are pooled capital funds collected and invested in multiple streams for reducing the risk. These funds enable easy portfolio diversification by investing in multiple assets at the same time. Investors can have experience of investing across different assets and varying risk options.
Hedge fund firms invest in Stocks, Real Estate, Commodities, etc. Though it is a risky investment option and profits from hedge funds are considerably good. These firms along with being beneficial to the investors are equally benefited by investors charging a management fee along with the good percent of profit.
These funds are considered to be more liquid than private equity and venture capital funds.
Fractional ownership investment modules are gaining more and more popularity offering low ticket sizes in reputed commercial Real Estate properties.
Fractional ownership allows investing in a fraction of the property of high net value assets. It’s an alternative investment option to investing in a single property that would often require taking a loan from a bank.
These investments provide stable passive income along with a good percentage on the sale of the fraction of property after the tenure
There are multiple alternative funds for investors who want to try their hand at unconventional options. These unconventional options help investors to check their risk tolerance and also to experiment with tenure and budget. Having an alternate investment will lead to risk diversification of the investment portfolio as well, and this way the investor will have something to hold on even when the traditional options fail.