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Best Alternative Investments - Which are the Best Alternative Investment Opportunities. Alternative Investing.

Best Alternative Investments

An “alternative investment”, by definition, is simply any kind of investment product other than the traditional stocks, bonds, property or cash. It can be a foodstuff or a wine, usually with some quality value attached to it, or it could be antiques, stamps or works of art to name but a few. These are known as tangible assets. Alternatively it might be a financial asset such as commodities, hedge funds, venture capital, derivatives or private equity.

One of the reasons why serious investors support alternatives is as a means of diversifying their financial portfolio for the purposes of risk minimisation. As there is little correlation between traditional investments and these alternatives a major deterioration in the fortunes of one need not affect the performance of the other.

From this list hedge funds may on the surface appear to be the odd one out as they do indeed invest in listed securities. However the manner of their investment is such that they provide an absolute return through market neutral strategies, and as such they operate outside of the markets they invest in.

Often alternative investments will by their very nature not be available to small investors, requiring as they do a large commitment. They may even be barred by regulators from going on sale to the general public.

The success of alternative investments depends very much upon the investor’s ability to second guess what an asset or commodity may be worth at some future time. A good example would be precious metals, the value of which ebbs and flows completely outside of the realms of “normal” economic activity. Just as the value of property, say since 1963, has increased several times beyond the rate of inflation, so the same may apply to gold, silver or any other commodity.

However trying to determine the best alternative investments can as a process be a little hit and miss. A cynic may suggest wine as an option because if its current fortunes as an improving investment product were to go into reverse it can at least be consumed and enjoyed. One unlikely commodity that is enjoying great popularity amongst investors right now is timber. Land is also increasingly at a premium due the rapidly expanding population of the world and the challenge of feeding it.

As a general rule of thumb the best alternative investments will be in those products and commodities that are the least affected by the economic downturn due to them having the least correlation to traditional investment forms. Search for some current alternative investment ideas online at the above websites.

 
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