What Alternative Investment Opportunities Opened After The Crisis?

The 2007 global financial crisis impacted virtually every aspect of the world’s economy. As investment advisers tried to navigate the uncertain terrain in front of them, many identified …

Gold bar and coins

The 2007 global financial crisis impacted virtually every aspect of the world’s economy. As investment advisers tried to navigate the uncertain terrain in front of them, many identified alternative investments as promising additions to their investment portfolios.

Alternative investments cover a broad range of investments having unique characteristics. They’re truly one of the most dynamic classes of assets. The good news is that many alternative types of investments have become more accessible to the individual or retail investors after the crisis. Alternative investments are a diverse asset class.

Here are the top five alternative types of investments everyone should know:

  1. Private Equity

This alternative investment is a broad category that covers capital investments not listed on the New York Stock Exchange and other public exchanges. It also refers to those investments made into private companies. Growth capital, venture capital, and buyouts are the subsets of private equity. Growth capital helps more mature companies restructure or expand, while venture capital focuses on early-stage ventures or startups.  On the other hand, when a division of a company or the whole company itself is purchased outright, it’s under buyouts.

Note that private equity is different from stock. The difference occurs due to an event known as listing of shares. It’s when a part of the ownership of the company or equity is allotted to the public to raise capital. Stocks can then be traded on the stock market or stock exchanges after listing. That’s why stocks are a conventional investment and don’t fall under the alternative investments’ category.

Simply saying, stocks are equity shares that can be issued to the public in return for company ownership share. On the other hand, equity is a capital that’s invested by a promoter of an enterprise and, in return, holds the company’s ownership. Nevertheless, whether you’re choosing private equity or stock, it’s crucial to screen your choices and only invest your hard-earned money in the best option available. In the case of stocks, some useful stock screening tools exist.

  1. Real Estate

One of the most common types of alternative investment is real estate. Of course, it’s part of the American dream to own a home. It’s where you live, but it can also be considered as an investment. You’ll be owing taxes if you sell your house for a gain.

Many investors now think of real estate when it comes to expanding their portfolios. The increasing scarcity of land resources plays a huge role in it.

Note that there are other ways for you to get involved in the real estate industry other than buying a property. For instance, you can try investing your funds through a real estate crowdfunding platform. You can also become a lender to another investor. Basically, what happens is that you’re going to loan someone cash and the note’s collateral will be the property.

  1. Hedge Funds

This alternative investment refers to funds that employ various investing strategies and trade relatively liquid assets intending to get a high ROI or return of investment. Quantitative strategies, volatility arbitrage, market neutral, and long-short equity are some of the strategies employed by hedge fund managers. Note that hedge funds are an inclusive type of alternative investment. At the moment, high-net-worth individuals, mutual funds, pension funds, endowments, and other institutional investors are the only ones that can avail them.

  1. Precious Metals

Gold, silver, and other precious metals are also common alternative investments. Owning precious metals is like having a mini insurance policy since they’re often seen to maintain their value without depreciating. To invest, you can either buy bullion or invest in gold or silver mutual funds and ETFs. However, bullion and other physical gold are the way to go if you’re hoping to use precious metals as your store of value. Of course, you can invest in mining companies or ETFs if you simply want to have a hedge investment. You can buy gold, silver, platinum, and palladium and enjoy instant liquidity into 27 national currencies as well as zero custody costs. All spendable via the Uphold debit card.

  1. Cryptocurrencies

At the moment, cryptocurrency is enjoying the sun. Ethereum, Litecoin, Ripple, and, of course, Bitcoin are all cryptocurrency networks that have swept the headlines of media outlets in the last couple of years. 

Coinsmart

Cryptocurrency is being accepted by the public more and more despite having no central bank to support it. Yes, there are currently no regulations imposed on digital currency. That’s why the volatility of Bitcoin, Ethereum, and others can be pretty wild. However, experts see this alternative type of investment sticking around and even improving in the coming years. Invest with caution, however, if you choose to go this route.

Final Thoughts

Alternative investments are a good option for diversifying your portfolio. However, it’s important to remember that you should always understand not only the benefits, but also the risks anytime you’re investing. It’s true even when it comes to choosing alternative investments. Weigh your options carefully!

Author Bio

Gladys Cooper has always been fascinated with writing, and has spent most of her life writing. Gladys has thousands of loyal readers who regularly waits for her content about business, investment, and debt management.  

Share This:

In this article

gemini