Most investors think of investing as investing in stocks and bonds; however, there’s another area of opportunity known as alternative investments that could present themselves.
Alternative investments offer great potential to diversify a portfolio, reduce risk and generate additional income – but can be complex and require an elevated tolerance for illiquidity.
Investing in Wine
Wine can be an indulgent or elegant way to entertain. But wine also represents an investment opportunity with a proven record as a low-volatility asset that could add considerable value to any portfolio.
Wine can add an attractive diversification strategy to any portfolio, especially when compared with stocks and gold. Over the last five years, the Liv-ex Fine Wine 100 Index has generated 21% returns, outperforming both FTSE 100 and gold prices.
Investing in wine can be challenging. To select wines with potential appreciation in value requires knowledge and expertise; also you should store it properly to reduce damage or spoilage that could reduce its value over time; furthermore it is crucial that you understand how taxes could impact profits if selling wine; however there are new innovative methods of investing that make getting started easier than ever! Luckily there are ways for anyone to get involved – like investing via crowdfunding platforms that make the investment process simple for anyone to begin investing.
Investing in Art
Like classic cars, vintage clocks and bottles of ultra-premium wine, art can serve as an attractive investment option. Many wealthy individuals are diversifying their portfolios with art investments.
However, art investing requires extensive research and an in-depth knowledge of the market. Furthermore, its success may depend on consumer tastes – which may alter with time – while many art pieces do not trade on an exchange and thus may be difficult to liquidate.
Retail investors can still gain exposure to art through funds or fractionalized artwork platforms like Masterworks. Investors looking to add art to their portfolio should consult with a financial advisor; SmartAsset offers free match tools which connect investors with local advisors who can help develop a strategy, or read our blog on finding the ideal advisors.
Investing in Stamps
Rare stamps may seem like just another grandparent’s hobby, but investing in rare stamps could yield thousands of dollars – such as when an 1856 British Guiana 1 cent Magenta recently fetched $9.5 million at auction! Stamp investing offers high returns with reduced volatility.
Heddle notes that collectors who have made significant profits share one trait in common: they’ve been collecting since childhood and at age forty or fifty have finally found ways to turn their passion for stamp collecting into profit.
Heddle notes that rare stamps and coins can be considered safe investments during times of political or financial unrest due to their lower inflation than other investments. Investors interested in diversifying their portfolio with an investment option that offers strong returns without correlating directly with mainstream markets should look towards platforms like Vinovest.
Investing in Coins
Rare coins offer a viable alternative investment opportunity. Examples of such investments include American Silver Eagles and 10oz bullion bars, which often yield higher returns than stocks. It’s important to research the market conditions surrounding such investments before proceeding; as well as being mindful of any associated risks.
Alternative investments tend to be less liquid than their traditional counterparts, making it harder for investors to sell when the time is right. However, their lack of liquidity may reduce volatility and improve price stability for investors.
Alternative investments can be an excellent way to add diversification and balance to your portfolio, yet can carry with them an elevated degree of risk that is not suitable for all investors. A portfolio strategy including alternative investments may increase long-term returns while shifting your efficient frontier. NerdWallet suggests seeking advice from financial professionals prior to investing in alternative investments; Emory University Goizueta Business School provides a five-week online course on this topic that may help provide some education on this matter.