The global economy isn’t as stable as it used to be. Traditional investments, such as stock, bonds and cash experience more volatility and less security. This has caused investors to seek alternative forms of investment, in order to protect their assets and secure funds against global uncertainties. However, traditional investments have become so common, that 52% of financial advisors admit that they’re not as knowledgeable about alternative investments as they’d prefer.
Still, investors are exploring alternative possibilities regardless. The main reason alternative investments are becoming increasingly popular and sought after is that they provide more stability, even though they’re less liquid than traditional investments. Alternative investments are any type of investment that has nothing to do with cash, bonds or stock. Which one you should opt for is entirely up to you and what you expect from your investment. Here are a few common alternative investments all investors should be aware of.
Silver is one of the precious metals, that is commonly used as an alternative investment. The main reason silver is so popular as an alternative investment is that it’s more affordable than other precious metals and that there’s a high demand for silver on the market. Silver can be a great way to secure your funds over a prolonged period of time because it has an intrinsic value. Moreover, silver can be used as a crisis commodity that protects your assets against inflation, economic crisis, and global instability.
Also, silver is quite liquid, due to its special properties. That widens the use of silver from simply being a form of money to being used in various industries, such as medicine, jewelry, electronics, energy and more. Furthermore, silver also comes in form of rare coins and silverware that can have added value based on the rarity, condition, and demand. Much like other precious metals, silver tends to maintain its value, which makes it ideal for long-term investments.
Investing in gold
Gold is another precious metal that can be used as an alternative investment. Gold holds more value than silver and it’s more sought after by investors. Gold has always been the most popular precious metal in the world, mainly because its use dates back centuries. Gold was used to represent a person’s financial and social status. Nowadays, gold acts mainly as a hedge against inflation and geopolitical crisis that can affect traditional investments.
Just like silver, gold can maintain its value for a prolonged period of time, and its special properties, such as high conductivity, softness, lack of corrosion and tarnishing make it a highly valuable metal in various industries. The most popular means of using gold for investors is to invest in gold coins, because it makes their assets more liquid and easy to sell. Aside from being a crisis commodity and a valuable industrial material, gold also has traditional value in some countries, such as India and China. In short, gold is the most sought-after precious metal in the world and one of the most secure alternative investments as well.
There are countless new startups being established all the time. There’s always a few businesses with a great idea, but with a lack of funds for properly developing and growing their company. Many investors see this opportunity as a means of alternative investment. Through venture capital, investors can financially support a startup or an early-stage small business with a potential to become a successful enterprise. In return, investors get a share of the company, making them stakeholders of the business they’ve supported.
This form of alternative investment has the potential to yield a considerable return on investment if the company you’ve supported becomes successful on the market. Venture capital involves more risk than other alternative investments, but it can become quite profitable if it’s a calculated risk. As an example, companies such as Twitter, Facebook, and Google were a product of a successful venture capital investment.
Real estate investments
Real estate properties are in high demand. Investors who are looking for alternative methods of investment can find real estate to be a great investment opportunity. Many investors find this common alternative method to be ideally suited for long-term investments. The main reason is that owning a real estate property can generate profit over long time periods. You can purchase a real estate property and rent it out.
Aside from rental income, you’re also entitled to tax deductions on mortgage interests, as well as tax returns. Moreover, you can also invest in properties and sell them when the market conditions suit you and when the property prices go up. In addition, real estate investments are a good way to diversify your portfolio. That means that you can allocate your assets across various types of investments, in order to secure your funds and ensure stability.
The world’s economy has had difficulties finding stability ever since the crisis in 2007/08. This has encouraged many investors to seek alternative investments in order to protect their assets. Alternative investments may not be as liquid and profitable as traditional methods, but they offer more security for protecting assets against global instabilities. Before you invest in alternative methods, it’s recommended that you familiarize yourself with the most common ones in order to find an investment that suits you best.