Alternative Investments – Let’s Deal With The Negatives First
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As mentioned in my last post the financial world is crazy at the moment and it doesn’t look likely that craziness will end anytime soon.
Alternative investments offer you the opportunity to reduce risk. One of the key advantages of alternative investments is that they aren’t very correlated to stocks and shares. This means that when you turn on the news and see that the stock market has fallen by 5% you now that your other investments haven’t fallen that much.
Before we really look at different options you need to consider the following…
There are some disadvantages to having alternative investments. Often you won’t be able to find a buyer easily. The great thing about the stock market is that when you want to sell there is always a buyer. The market is very liquid.
The problem with alternative investments is that there isn’t the liquidity there. That often means that you have to seek out a buyer and this puts the advantage their hands and can reduce the price. This isn’t always the case with alternative investments but it does happen.
Then you have the problem of valuing the asset. If there aren’t lots of buyers and seller it is hard for the market to establish a fair value. This can put you at a disadvantage.
Lack of information is a big problem with alternative investments. Lack of information puts an individual at a major disadvantage. The lack of historic data in these markets is a contributor to this problem. However, if you do have superior information then you can clean up.
Establishing the current value by analysing and seeking out data can take time. This adds to the ‘cost’ of the purchase and therefore you should demand a better return.
A lot of alternative investments are physical assets. This means transportation and storage costs. These are hidden costs that can catch investors out.
Now we have covered the disadvantages we will move onto the business end with some alternative investment strategies.
Until next time!
Alternative Investments
Posted by admin
Welcome to my website about alternative investments. This is brand new site that aims to give you an informed view of the alterative investments options that you have available to you.
So why now?
Well the financial world is still in a mess… a complete mess. People have money but they don’t know what to do with it. It is not making extraordinary returns any more it is more about preserving your money. You have the opportunity to do this with alternative investments.
So you are considering alternative investments but where do you start?
Well when I was looking for information on them I didn’t find a lot. I was surprised by that so I decided to create this website. I will be using my knowledge for certain investments and I will be researching and presenting information back to you on others. It is also a chance for me to learn.
So what counts as alternative investments?
According to Wikipedia they are investments other that stocks, bonds cash and property. It then goes on to describe art, wine, antiques, coins and stamps as alternative investments. This means that a lot of personal wealth can fall into this alternative investment management.
It then argues that commodities may or may not be classed as alternative. For the purpose of this website I will class commodities as alternative.
I will be posting soon more about these alternatives to first present the idea but then I want to go into more detailed alternative investment strategies to help you. I would love to have your comments and get some feedback on the website. I would love it to be as interactive as possible and I will need your help for that.
If there are any alternative investments funds that you want me to look at then please get in touch. I will do a bit of research into it then report back.
Until next time!