People tend to go into sharp cautious mode at the mention of alternative investment ideas because of fears that such investments operate somewhere around the grey areas of regulations. Of a truth, alternative investments might possess a higher risk quotient than traditional investments, but that risk is balanced out by the possibility of exponentially higher returns than traditional investments.
Alternative investments could be viable investment assets through which you can get outsized returns that you might never get from traditional investments. Hence, alternative investments definitely have a place in a truly diversified portfolio because they can provide an element of speculation to complement conservative investments. This article provides insight into four alternative investment ideas that you should consider.
Invest in private equity funds
Many startups are working on new or highly innovative products and services that could give birth to the next Facebook, Uber, or Tesla among others. However, many of such startups are set up as private companies and you can’t just call your broker to help you purchase their shares. Yet, such private firms often have funding needs in order to turn their ideas into proof of concepts, viable products, and in order to scale up production for the mass market.
Private equity funds often help institutional and non-institutional investors obtain information on promising private companies. Investing in private equity funds often provides massive ROI when all the stars align. The best part is that the lifetime of the investment is often short to medium term because investors typically exit once the firm has an IPO or when a much larger company acquires the company.
Invest directly in startups
Private equity funds (mentioned above) often take a management and performance fee from the funds invested with them. More so, the fund managers make the decision on the startups in which they’ll invest with little or no input from the investors. If you’d prefer to have a direct involvement in your investment in private firms, you should consider you can scouring crowdfunding platforms to uncover the hottest startups in the market.
Crowdfunding platforms provide you with information on some of the latest startups. These platforms provide a meeting point for prospective investors and the founders of such companies. However, you should be ready to do the heavy lifting of conducting your due diligence on the products, the founders, and dissecting every detail in their business plan.
Invest in the derivatives market
If you are tired of investing in stocks for months and years without decent gains to show for your troubles, you may want to consider the derivatives market. The derivatives markets might also be a better option for you if you don’t have a large trading capital with which you can buy a decent number of stocks needed to a diversified portfolio. The derivative market has many assets such as options and ETFs,
You should also consider learning how to trade binary options because they provide a massive leverage to profit on different kinds of securities without actually buying or owning the security. You can use binary options to place derivative trades on the general direction and on the degree to which a stock, currency, bond, or commodity will move in the market.
Invest in sports
If you really want to take the less-trodden path as an investor in alternative markets, you should consider investing in sports. You need not buy a sports team or create your own team but you can still make a get decent ROI in the sport industry if you are passionate about sports.
A smart way to invest in sports is to invest money with firms that invest in athletes in the hopes of getting returns when the athlete gets into the limelight. Some other sport investment firms scout for talent in developing countries and they help them to find a club and a fund a move to Europe or U.S.
Some hedge funds also have exposure to the sports investment industry by treating sports like a commodity. Such firms oven involve in sports betting but they hire sports analysts and data analysts to help make informed decisions in betting on odds.