“Courage taught me no matter how bad a crisis gets … any sound investment will eventually pay off.” — Carlos Slim Helu

What Is An Alternative Investment?

Anything that does not fit into the conventional equity categories; meaning anything that is not cash, stocks, or bonds.  Things such as art, other collectibles, real estate, cryptocurrency, commodities, fine beverages, private equity, and hedge funds are all the most common doors to alternative investment classes. Why do these asset classes exist? To hedge against inflation, taxes, market volatility, and to diversify a portfolio to name a few reasons.  

Documents about Alternative investments with financial charts.

Alternative assets are typically traded by institutional investors, or those with high net worth because of the exclusiveness of the assets. Alternative Investment classes can not even be accessed unless you have $1M+ dollars, and meet a certain income criteria. The veil is lifting as new investment platforms bring these to retail investors, and the value is there. Platforms like Vinnovest, Fundrise, and Republic are bringing a new wave of investment options to this generation of retail investors. Commodities have been around since the beginning of human history, with art and collectible trading being older than the United States! 

Why Do I Need Alternative Investments? 

Great question, well there are several reasons. First and foremost inflation is not going anywhere, anytime soon. Second technology has opened access to markets which would normally only make the “rich richer” .  Third the  door has opened, and now Private Equity to Commercial Real Estate funding is now being democratized. This trend will only snowball into a larger democratization of all markets former here. Finally the diversification of any portfolio just makes sense. 

Retail Investors having the ability to fund projects, businesses, and sway markets will be one of the best things to happen to the U.S economy and beyond  for generations to come. The access to these markets has me seeing generational wealth for myself being a real possibility. That is why I see a need for Alternative Investments. Another reason for alternative investments? Some of the more mainstream alternative asset classes outperformed the S&P 500 in 2021, and by some pretty massive margins.

What Next? 

Keep in mind this is not financial advice as you move onto checking out the alternative investment asset classes. Please do your own research, and always vet any investment before pulling the trigger. We all take risks in life, and yes these investments can be illiquid, and  very risky compared to traditional investments. I see nothing but more potential, options for investing, and a more transparent democratized market ahead.  Stay tuned for more, and check out some of our favorite platforms here. 

Written by Caleb Hogan from ofthefreemarket.com on May 14, 2022