What are alternative investments and how do they compare?

November 07, 2019

Sometimes overlooked by novices, alternative investments are successful financial assets that don´t fall into traditional investment categories such as stocks, bonds and cash.

However, today´s investment climate is seeing more shrewd investors get involved in the ever-growing sector of alternative investments. A few of these examples include real estate, art, music and wine.

The above may offer higher yields than traditional investments, especially during times of low-interest rates. And various long-term focuses such as sustainability, technological innovation and competition for prime assets are further driving the evolution and popularity of these methods.

As they don´t typically correlate to the stock market, they don´t suffer from the volatile fluctuation associated with traditional investments.  As well as avoiding these dramatic peaks and troughs, alternative investments also add diversification and offer tax benefits not available elsewhere.

Those who use alternative methods within their portfolio preach that they now have access to sophisticated investments and higher returns that were only available to institutions and the wealthy until recently.

Global investment management corporation, BlackRock, say on their website: “A 60/40 allocation to stocks and bonds may no longer be enough to meet long-term investment goals. Alternatives can lower volatility, enhance returns and provide higher levels of income for a portfolio.”

Wine

The value of fine wines has risen by 20 per cent over the past year, with demand increasing as investors look into this as a way to diversify their portfolios.

The ten best performing wines have increased in value by an average of 150 per cent over the past five years. The best performer, Petit Mouton 2011, has grown by 165 per cent, increasing from £690 to £1,828.

Art

A recent academic study, based on examining data from 1.2 million auction house sales of paintings, drawings and prints determined that art appreciated in value by approximately 3.97 per cent a year: a considerably higher amount than the interest rate of any savings account.

Real estate

The growth of property prices has slowed significantly recently with increases remaining below 1 per cent for the last few months. This has made it very difficult for those who want to purchase a property to flip or to become a landlord.

However, there is still a way to be involved in real estate investment and receive market-leading returns.

Accumulate Capital searches for the best development opportunities to offer investors, working with reputable developers in prime locations to ensure success in deliverability and profitability.

Investors are kept up to date with due diligence checks, project updates and investment memorandums so they remain confident, informed and comfortable throughout the process.

They are also provided with an industry-beating annual return of 11-15 per cent. This revenue is returned upon completion of the development – between 12 and 18 months – alongside the original lump sum that was invested.

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