Alternative Assets Your Portfolio Needs for True Diversification

Alt assets

Diversification is not a new concept, but it seems that it’s a common downfall for many new investors. The reason diversifying your retirement portfolio is so important is to make sure that your risk of loss is reduced in any market condition. By having fingers in a few pies with the right mix of stocks, and investing in multiple sectors, you will be well on your way to retirement bliss. But how do you get there? And how do you know what investments are for you? Let’s explore a couple options.

Energy

For those with a higher risk appetite and a longer time horizon, there are hundreds of individual stocks in which one can invest. As with all individual stocks, companies’ stock prices can swing wildly in short time spans, particularly in the relatively young field of renewable energy. The best way to temper risk while still investing directly in renewable energy companies is to buy shares in companies that do more than just renewables, such as GE, and General Motors.

Real Estate

Here is where you have a few more options. There’s the more traditional route of real estate investing through commercial property, either as the manager or perhaps a developer. And there’s investing through your self-directed IRA, so that it is directly beneficial to your retirement. Investing is always a risk. But unlike stocks and bonds which are intangible, people can see and walk on real estate. Both investors and non-investors have experienced what it’s like to buy or rent a single-family home, an apartment or a condominium sometime in their lives.

Startups

Investing in startups can be rewarding both financially and personally, because by investing in a startup, you are contributing to job creation and capital formation. The influence of entrepreneurs has shaped the U.S. since before its founding, and the contribution with such innovation is absolutely immeasurable. One of the best ways to reduce risk is to understand the market that startup operates in. This will provide you with a better sense when projecting the potential success of the venture. Make sure that the business has a scalable model so that it can grow to a level in which you will be able to get your money back as an investor.

In the end, there are many opportunities to make money in alternative assets. By doing your research and treading carefully, you can minimize your risks while also doing well.

Author: Tanya

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