In an era marked by economic uncertainties and market volatility, savvy investors are turning from traditional to alternative investments to strengthen their portfolios. While stocks and bonds remain integral to a healthy portfolio, relying solely on one means of investment may expose you to significant risks.
To diversify your investment portfolio, evaluate the alternatives based on stability, returns and risk tolerance.
Real Estate
Investing in real estate is a popular choice for diversification and is one example of an alternative investment. The tangible nature of property assets offers a sense of stability and security, as property value generally appreciates over time, moving independently of stock market fluctuations. One clear advantage of real estate is the dependable stream of rental income that properties can generate.
At the same time, owning a rental property can be a time-intensive commitment as you assume the responsibilities of a property manager or landlord. Simultaneously, substantial capital is required for real estate investments, and today’s competitive market requires investors to research diligently to identify opportunities poised for growth.
Cryptocurrencies
While a less tangible means of investment, the rise of cryptocurrencies, such as Bitcoin, have given investors a new way to diversify their portfolios. Digital assets have seen explosive growth and offer the potential for high returns as they operate independently of traditional financial markets.
However, the cryptocurrency market is known to be highly unpredictable, with regulatory uncertainties and security concerns as common drawbacks.
Peer-to-Peer Lending
Lending money directly to individuals or businesses without the need of a financial institution, known as peer-to-peer lending, can be appealing to investors because they have a more direct social impact by contributing to others’ growth and success.
Peer-to-peer lending platforms, like Prosper and Upstart, connect lenders and borrowers in a rather seamless process. However, these platforms are generally less regulated and therefore carry a higher risk, as loans may be unsecured with no collateral backing the loan if it defaults.
Private Equity
Private equity firms invest funds in privately-held companies, often realizing significant financial returns over time as businesses mature. While some of these long-term investments require patience before payouts, others require only a one-year investment term with monthly payments.
The key to selecting a private equity or alternative investment partner is evaluating their track record of successful investments. Experienced firms actively manage your investments, allowing you to take a hands-off approach and reap the benefits with minimal efforts, yet the size and location of the firm will determine the level of support and commitment you get when it comes to your investment.
Partnering with a family-owned or local investment firm allows investors to see the immediate impact of their investments as dollars are put back into the local community through commercial loans and real estate investments, building up nearby communities and neighborhoods.
Whether you’re just starting to explore alternative investments, or refining an established portfolio, Milwaukee-based Mach1 Capital offers decades of experience investing in southeast Wisconsin, helping local clients build a more robust and resilient financial foundation with reliable monthly returns and a history with zero lender foreclosures.
For more information on diversifying your portfolio with alternative investments, visit Mach1 Capital’s website or email anthony@mach1capital.net.
