What are Alternative Investments?

What are Alternative Investments?

I write a whole section on the various types of alternative investments, but what are they? Alternative investments are often times the types of investments that are stocks, bonds, or real estate. They can include a wide variety of investments including foreign currency, but more typically commodities and physical tangible assets. Did you know they can include art, antiques, and fine wine? These types of investments are often used for a strong diversification and hedge against normal investments.

Alternative investments are attractive to youthful investors because they are easily available. I write that because you are able to access them a lot easier than stocks, bonds, or real estate which require set amounts of money and paper work. Alternative investments like coins can be purchased on eBay, fine art at the local gallery, domain names at GoDaddy.com, etc. Availability is key and the best part is that a lot of these prices are not fixed and negotiable.

A lot of alternative investments have performed very well. In fact, several articles online point to how the top collectable comic books and the top most popular rare coins have out performed the stock market in the last 50 years. Alternative investments are also valuable because they have the potential to gain immensely. Again because there are often no set prices, the real value of your alternative investment is often in how much someone else is willing to pay for it.

Thus, alternative investments can be also quite tricky because their value is not so easily assessed like the more typical investments. Stocks have daily ticker prices, bonds maturity dates, and real estate can be professionally assessed. But what about a rare vintage of wine? Sure you may have paid one price for it, but that does not necessarily mean someone else will pay the same or better. Likewise, if you bought an antique toy for one price its value may have risen or fallen sharply due in large part to demand.

Demand is almost always the number one determining price in alternative investments. It often even outweighs rarity as a determining factor. For example, a great alternative investment could be a Civil War token, produced during the American Civil War. Most of these coins were minted in quantities less than 1,000 so they are quite rare. You can buy one of these for often less than $100. It is attractive in in great color Yet, a 1916-D Mercury dime with a mintage of 264,000 sells for $1,500 when it is well worn with most of its features no longer visible.

Why? Because more people collect Mercury Dimes and less people are even aware of Civil War tokens. Will you choose rarity or demand for your alternative investments?

Do not let demand simply be the basis for your alternative investments though. Certain things have been in high demand in the last ten years that many have considered excellent alternative investments only to see them fall to a price of practically nothing. Although demand is the most important element, rarity has to be an integral part of that. In addition, the demand has to have greater potential than a decade. Common alternative investments include trading cards and action figures from our childhoods, usually the 70’s, 80’s, and 90’s.

These can be tough because it is hard to say what will remain iconic and popular like certain timeless alternative investments have.

Pokemon cards were hot for several years but demand for them crashed as collectors lost interest and they realized the cards were printed in the millions. What about those toys known as Furbies? Do you remember the cigar and wine craze of the mid to late 90’s? As for alternative investments in my portfolio I use that nice blend of rarity and demand but put more emphasis on rarity.

It is difficult for youthful investors to own too much of both but affordable rarities Here are some rare affordable alternative investments: Civil War tokens, original handwritten letters before 1865, gold bullion, golden age comic books,

Alternative Investments are useful in just about any portfolio and are an integral part of you making money aside from conventional investments. Alternative investments allow you an excellent tangible assets that is likely to have demand beyond stocks and offer rarity for which others will demand. Thus you can experience a comfortable rise in value over time. As always try your best to buy low and sell high.

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