When people think of investments, they tend to think of things like stocks and bonds. However, we know that investments don’t only fall into those two simple categories. An alternative investment is one that can be seen as outside of “regular” investments like hedge funds, commodities, venture capital, real estate, private equity, or even antiques!
For the most part, alternative investments are not regulated by the SEC, nor are they easy to liquidate (or get your money back from). These types of investments are, therefore, higher risk and will often require larger minimums and initial fees.
It can be hard to value an alternative investment at times, making it extremely important for investors to carry out their due diligence through heavy research and legal advice. Additionally, many alternative investments still do not have a long history to look back on, making it even more risky to invest in.
We often hear that one should never have “all of their eggs in one basket,” and investing in alternative investments can be a great way to diversify when done correctly. While some may be too nervous to dive into alternative investments, there can be high rewards for the high risk involved.
If you are unsure of how an alternative investment will play out for you, consult with experts in that particular area of investment! Learn from those that have not only been successful in the field, but have also failed – both will provide important lessons to learn before diving into the realm of alternative investments!