ALT Investing Info

Future Proof your Portfolio with Alternative Investments

Alternative '“Alt” investments hedge against an over-inflated stock market by generating enhanced returns and diversifying from traditional investment vehicles.

What is an Alternative Investment?

Thanks to the information revolution, the best-kept secrets to building wealth are quickly becoming publicly accessible. The most profitable investments were once reserved only for banks and large institutions, but due to deregulation from the Dodd-Frank Wall Street Reform Act of 2010 and the JOBS Act of 2012, these investments are now accessible to anybody with the knowledge and capital to invest.

Learn More

How It’s Made:

Billionaires

Main Street is capitalizing on deregulation and low-interest rates by allocating large portions of portfolios to alternative investments. By responsibly investing in alternatives, such as private equity, main street investors are enjoying some of the coveted returns that are creating more billionaires than ever before.

Learn More ->

Alternative Investment Global Market Share Growth

Source: Preqin Global Alternatives Report

Benefits of Alternative Investments
**Generally Uncorrelated to the Stock Market** - It does not change relative to the ups and downs of the market. This is extremely beneficial because the low correlation provides opportunities for portfolio diversification.
**Lack of Volatility** - In a traditional public investment, the share price fluctuates based on a variety of factors, but they do not fluctuate with private alternative investments. Plus, alternative investments are typically backed by a real asset.

Strong Income - Most public investments do no payback in cash on a monthly or quarterly basis. Many alternative investments have heavy cash flow in short time frames with low minimums to investment.

Direct Ownership - In most public investments, what you’re buying is a paper asset – the discounted value of future expected earnings. You don’t really own anything. In private alternative investments, you have partial or full ownership of the real asset, not just on hypothetical paper value.
Direct Tax Benefits - In many private alternative investments, you become the full or part-owner of the fund, syndication, painting, bottle of wine, mortgage note, etc., and as such the tax benefits get directly passed on to you. Ex: pass-through depreciation, long-term capital gains treatment, etc.

Difficulties with Alternative Investments

While there are many advantages to investing in private alternatives, there are aspects that must be taken into consideration. The three main drawbacks are:

Liquidity - Many have long lockup periods anywhere between 3-10 years before you can withdraw your initial investment.
Difficult Valuations - With inherently complicated valuations, many investments may require specific knowledge. Some exotic investments, e.g. fine art, precious metals, etc., may show unpredictable demand patterns. In addition, their valuation may be complicated due to the uniqueness in their nature.
High Purchasing Cost - Alternative investments are frequently associated with high purchasing costs. Some alternative investments such as hedge funds require a minimum investment amount, as well as a fee.

Fortunately, with intelligent financial planning, most potential barriers to entry can be overcome.