Do you want to be let in on a secret that the ultra-wealthy already know? 

The facts are less complicated than many people believe: the ultra-wealthy have been using alternative investments for generations. Contrary to popular belief, alternative investments aren’t as risky, exclusive, or complex as their reputation lets on. 

When you’re ready to start unlocking your wealth potential, here’s what you need to know about alternative investment solutions and why you should add a few to your portfolio. 

What are Alternative Investments?

Alternative investments are not a one-size-fits-all type of investment. There are tons of different alternative investments out there, allowing you to focus on areas that truly matter to you. Whether you want to invest in one, two, or the entire list, that’s entirely up to you – each one can be a powerful part of your goals-based financial plan to unlock your wealth potential and achieve financial freedom.

Here are a few common types of alternative investments and how they could insulate your portfolio from financial risk.  

• Real Estate: Real estate is often viewed as an appreciating asset that you hold for the long term. You can flip fixer-uppers to earn a profit, or you can rent them out for recurring monthly income. Even crowdfunding real estate purchases is now an option. 

• Art and Collectibles: Art lovers rejoice over the idea of investing in a beautiful work of art. It can hang in your home and tends to increase in value the longer that you own it. Collectibles in areas that you are passionate about are also a great option with returns that could yield upwards of 1,000% when things go in your favor. 

• Business Ownership: If you want something a bit more hands-on, leverage your business skills to open the doors on a new venture. You’ll get a recurring source of income and may even one day be able to sell it for the big bucks. 

• Hedge Funds: While the other alternative investments listed here are open to just about anyone, a hedge fund is a bit more exclusive. However, if you qualify, there are tons of opportunities to make a little extra money on your investments. 

• Cryptocurrency: Get in on the growing trend of cryptocurrency by investing in well-known coins that seem to be increasing in value. From Bitcoin to Ethereum and everything in between, make sure to do your research and avoid buying something that has a limited track record. 

• Angel Investing: If starting your own business isn’t for you, then you may want to help someone else get their idea off the ground. You’ll lend them the cash needed for startup costs and have an ownership stake in the company.

Benefits of Alternative Investments

Alternative investments hold a few unique benefits, no matter what type you decide to invest in. Consider some of these perks to determine if investing in these assets is the right move for you. 

Appeals to Your Interests 

One of the biggest benefits is that you can pursue the areas that you’re passionate about. If you like art, don’t let anyone stop you from buying that fantastic painting. Sports fans can buy jerseys and memorabilia from their favorite team. Have experience in real estate? Buy a commercial rental property that generates recurring income month after month. 

By tapping into the areas where you hold passion and experience, you’ll be more confident and engaged with the process – which are valuable aspects of developing a wealth mindset. It just makes investing more interesting than simply picking stocks that are performing well. While there’s some science to succeeding with alternative investments, they offer a lot more freedom to pursue your interests. 

This makes investing more enjoyable and fun – two words that people don’t often use when referring to their investment portfolio!

Limited Market Exposure 

Investors who have a portfolio filled with stocks and mutual funds know that market exposure can really kill their portfolios. Current events are constantly influencing the stock market, often in a negative way. Alternative investments limit your market exposure and offer you a degree of protection from sudden drops in the market that could take your hard-earned cash with them. 

Potential for High Returns

Like any investment, no one is guaranteed a favorable outcome that nets them the big bucks. That being said, there’s excellent potential for alternative investment solutions to yield high returns when everything works out in your favor. Timing the investments just right is crucial to making a pile of money on your investments, which comes with some risk. 

However, alternative investments can see significantly higher returns compared to more traditional investment vehicles. Art as an alternative investment is a good example. Since value is based on the eye of the beholder, a piece of fine art you purchased for $20,000 could be worth $200,000 to the right buyer.

Diversification

 Diversification is one of the biggest buzz words when it comes to your investments. You don’t want to put all of your eggs in one basket, and the same is true when it comes to alternative investment solutions. Where you invest your money should depend on your investment plan, the risk you can tolerate, and other factors. 

Still, a decent portion of your portfolio should be allocated to alternative investments. We typically recommend that you keep 10% - 40% of your investments in these alternative solutions. 

Take the Next Step toward Financial Independence

Are you ready to dive right into the world of alternative investments to diversify your portfolio, potentially earn big returns, and make the dream of financial independence that much closer to reality? 

Here at Black Mammoth, we love alternatives. Our team is highly experienced in real estate investments, and we can help you get your footing in other alternative investments for your portfolio, too. We have the skill and experience to help you break into these markets which previously were left only to the ultra-wealthy.

Contact us today to learn more about alternative investments!