Finance experts often hammer in the necessity of investments. It’s one of the most effective ways to build wealth.
Most Americans opt for traditional investments. Stocks and bonds are at the forefront of this type of investment. A Gallup poll revealed that 61% of Americans owned stocks in 2023. That’s a three percent hike from 2021. Your 401(K) and the money in your savings account are also considered investments.
Many people find stocks and bonds intimidating though. The terminology and process surrounding them can be off-putting. There are other types of investments, though, which can be right up your alley.
Getting to know Alternative Investments
Do you own property? Were you able to save some of your childhood toys? Real estate and vintage toys are examples of alternative investments.
What is alternative investment? As the name implies, this is an asset that isn’t conventional. It’s an “alternative” to the usual cash, stocks, and bonds. Real estate, venture capital, and hedge funds are examples of this type of investment. Tangible assets like gems and artwork are also considered alternative investments.
Alternative investments are often described as illiquid. It means the item isn’t easy to sell or convert into cash. Let’s say you have an extensive collection of wines. You want to sell a vintage that’s almost 100 years old. You won’t have an easy time finding a buyer. It’s because of the limited interest. There are also very few who can afford it. But you can sell 1,000 shares in NVIDIA within the day.
Alternative investments are also called alternative assets. They’re often out of the purview of the SEC and other regulatory bodies. They were also limited investors with a high net worth before. Now they’re more mainstream and available even to casual investors. Many individuals are including alternative investments in their portfolios.
Top Examples of Alternative Assets
Alternative investments have two main classifications. These are tangible and intangible assets. The former are physical properties an individual owns. Artworks, collectibles, and real estate are some tangible alternative investments. Cryptocurrency and hedge funds fall under the latter category.
Here are the top examples of alternative investments.
- Collectibles
This alternative asset covers a wide range of items. Baseball cards, coins, and stamps are the original collectibles. Now fine art, sculpture, and vintage cars fall under this category. They’re also very profitable collectibles. Rare wines and old toys in mint condition are also collectibles.
People who invest in collectibles buy the physical items. They take care of these assets, hoping their value will appreciate over time.
Collectibles are fun to invest in. Most people who go for these assets are passionate about them too. These are risky investments though. The items can be expensive. There’s also the risk of damage if they’re not stored well or maintained. There’s a lack of dividends until the owner sells the collection.
- Hedge Funds
A hedge fund is an investment structure that uses various strategies to get an active ROI. One strategy is the long/short equity. This refers to the investor buying stock they believe will increase in value. They’ll also sell stock they expected to drop.
These are always earmarked for individuals with high net worth. They’re also available to institutional investors. Many hedge fund managers invest in conventional securities, like commodities and stocks. They enjoy less SEC oversight.
- Real Estate
Real estate is also considered as an alternative investment. It becomes an alternative asset when an individual buys apartments or office buildings. They generate wealth from their tenants. They also build equity as the property values go up. It’s akin to how bonds operate, except less volatile.
You don’t even have to buy property. You can go with a real estate investment trust instead. You’ll invest your money in various properties. A REIT manager will manage those properties and you’ll get a dividend.
Helping You Build Your Fortune
Building your wealth is easier with help from experts like Legacy Stock Transfer. Our company is one of the best stock transfer firms around. We’ve been in the business for decades. Our experience has given us a keen understanding of the funds industry. We offer customized shareholder and transfer agency services. We help streamline operations and automate tasks. We can transfer certificates and replace stolen ones. We can help with direct registration, DWAC, and FAST. We can also help with restriction removals and stock reporting. You can send us a message here or at info@legacystocktransfer.com. You can also reach us at 972-612-4120.