Are Alternative Investments Worth It? Here’s What Experts Say

According to PwC, alternative asset classes are projected to reach $21.1 trillion by 2025. Alternative investments, like real estate, private equity, art and private credit, can strengthen your portfolio by diversifying beyond traditional stocks and bonds.

However, certain restrictions surrounding alternative investments may mean they’re not worth it for everyone, since purchasing a collectible or vintage bottle of wine differs drastically from buying shares of stocks.

What Are Alternative Investments?

According to the Harvard Business School, alternative investments, or alternative assets, aren’t simply sold or converted into cash. For example, while you could quickly sell shares of a company on the stock market, you couldn’t liquidate your home or art collection as easily. The seven types of alternate investments highlighted in the article are:

1. Private equity: This broad investment covers anything related to investing in a private company that you can’t purchase shares in on the stock market.
2. Private debt: These are the investments that a traditional bank doesn’t finance.
3. Hedge funds: These exclusive investments are usually only available to those with a higher net worth.
4. Real estate: A common alternative investment, real estate investments include residential and commercial properties, as well as land.
5. Commodities: These are typically natural resources like oil, natural gas and precious metals. 
6. Collectibles: Assets like baseball cards, vintage wines, art and stamps fall under this category.
7. Structured products: These assets usually pay out to investors in the form of dividend payments, or they could be assets whose value is derived from another asset. 

   Read full article: https://www.gobankingrates.com/investing/strategy/are-alternative-investments-worth-it-heres-what-experts-say/

   This article was originally published on gobankingrates.com. Accessed on Nov 19, 2024.