When it comes to alternative investments, it refers mainly to all those investments in assets that are difficult to quantify and to keep in the portfolio due to their illiquidity and their difficult commercial valuation. Examples of these are investments in coins, stamps, wine bottles, art collections, or other collections, among other exotic investments.
In other words, alternative assets are anything alternative to traditional assets such as shares of companies traded in liquid exchanges, investments in corporate or government debt, and time deposits in the bank.
The reality is that the number of individuals who decide to choose to manage their own money and get a return on their savings is increasing. Because of recent technological innovations that are emerging in the financial world, a large number of investment alternatives that are very different from traditional ones such as stocks, mutual funds or bonds are appearing lately.
There are types of unconventional investments in the market, some with high risk and high profitability; others with lower risk but with attractive returns. Let us see some examples:
1. Alternative investment in hedge funds:
It is a collective investment vehicle that is privately organized, managed by professional companies (investment banks or fund managers) that charge commissions on results obtained and not generally available to the public since it requires minimum investment amounts very high.
These hedge funds have a greater degree of freedom than traditional funds, offering the freedom to invest in a wide variety of assets, practically in any type of market.
2. Alternative investment in managed futures:
Managed futures are an alternative asset class that has performed very well in the difficulties of the market, showing a low correlation with traditional asset classes, such as stocks, bonds, cash and real estate.
These are investment funds that trade futures and forward contracts for financial assets such as currencies, interest rates or intangible assets.
3. Alternative investment in real assets:
They are those assets that correspond to tangible physical goods object of use or consumption such as real estate, precious metals, commodities, etc. they have value for themselves compared to financial assets that have value for what they represent.
The market for real assets is the one that determines the flow of goods and services that is called national income (GNP) and that will determine the levels of real wealth and demand for financial assets. The real or tangible assets are machines, land, and structures owned by corporations and durable consumer goods (cars, washing machines, sound equipment, etc.) and residences owned by households.
These real assets incorporate securities that represent the ownership of these assets. Real assets can provide great income by taking advantage of periods of inflation.
4. Alternative investment in crowdlending:
It is about financing via loans to companies or individuals that are funded by individuals. It is done through platforms that offer loans to companies, whether they are SMEs, freelancers or entrepreneurs.
The financing requested by the company is covered thanks to small contributions from individuals who lend their money. These investors receive in exchange a monetary consideration, that is, the interest rate paid by the SME or company, and the intermediary platform keeps a small commission.
Without a doubt, this is one of the most democratic and attractive investment options today due to the number of services appearing on the market and the increasing use of technology to improve investor conditions.
In addition, these platforms allow investments with relatively low amounts, helping diversification and with different levels of profitability and risk.
In Invoiced, for example, an investor can invest online in accounts receivable with short maturities (15 to 120 days), little risk, and a return that ranges from 8% to 15% annualized, depending on the operation. Discover the benefits of alternative investments!