3 Ways Alternative Investments Can Help Diversify Your Portfolio

Investing comes with risks. No one knows what the future holds or how things will turn out exactly, but there is a way to reduce devastating loss from occurring.

Diversifying your portfolio could help minimize the risks and give you a nice cushion to ease any blows.

Smart investors know this and make a point to include different forms of investments in their portfolios. This means more than just investing in your typical stocks and bonds. The savvy investor explores alternative avenues, such as real estate, where opportunities for substantial returns exist. Embracing diversification strategies, including the integration of innovative tools like real estate syndication software, allows investors to tap into the potential of the real estate market and enhance the overall resilience and performance of their investment portfolios.

Alternative investments are a great way to diversify your portfolio and give you more options.

Continue reading to learn more about how alternative investments could help your portfolio.

1. Obtain Assets that Aren’t Tied Up in Stocks, Bonds, or Cash

Most investment portfolios mainly include stocks and bonds, but alternative assets could fix that! Alternative assets can range from precious metals to fine art to wine. 

In a nutshell, these assets are typically tangible and aren’t tied up in or represented by stocks, bonds, or cash investments. This gives the investor more freedom and opens doors to new territory. 

It’s especially exciting if you are strongly interested in a specific category.

For example, suppose you’re a lover of wine and have a strong background of knowledge on the topic. In that case, you may be particularly enthusiastic about supporting something you enjoy by investing in a vineyard.

Additionally, it’s become more accessible than ever before to begin obtaining alternative assets. You can find an alternative investment platform online with just a few clicks of a button!

2. Improve Stability During Times of Market Volatility

Stocks are risky, especially during times of rise in market volatility.

For example, in the last three years, the world has seen certain stocks plummet due to unprecedented hardships.

Many companies lost valuable business, while some completely went out of business. This was especially true for companies associated with travel, lodging, and hospitality services.

The bottom line is that relying too heavily on stocks and bonds is risky and could lead to significant losses in unfavorable circumstances.

However, alternative investments could help add more balance to a portfolio heavily reliant on stocks.

For instance, while there has been turmoil in the stock market, there has been favor in the real estate market. Houses and other properties have been selling like hotcakes for the past several years. Example of good investments are the real estate listings done by Mika Realty, LLC in Hawaii.

However, if you need a full-service commercial real estate development firm that takes the time to understand every aspect of your project to provide experienced financial analysis, site selection, entitlement services, and more, then a good company like JWA is all you need!

Real estate is considered an alternative investment and could yield significant returns for an investor and even a steady flow of income. Imagine if you owned some rental properties and rented them out to tenants who pay consistently. 

If you’re not interested in taking on the responsibility of being a landlord, you could invest in a real estate investment trust which deals more with commercial properties.

3. Obtain Assets that are Considered More Reliable

While there are still some risks with real estate investments, you could also invest in a more reliable alternative investment, such as agricultural commodities.

Agricultural commodities include different types of crops and livestock. They are things we need to live and survive. You may also consider investing in a forest land and seek forestry management services to ensure that the land and trees are taken care of and make them profitable.

You’re pretty much guaranteed to make profits off of this form of investment since agricultural commodity costs tend to remain reasonably consistent during normal levels of supply and demand and increase during inflation.

The Takeaway

It’s essential for you to diversify your portfolio by not solely limiting yourself to stocks and bonds. Instead, use alternative investments to assist you with creating variety.

Use alternative investments to help you obtain assets that are not dependent on stocks and bonds, improve your financial stability in times of economic turmoil, and obtain assets that are considered reliable.

Take your portfolio to new levels!

Indiana Lee

Indiana Lee lives in the Northwest and has a passion for the environment and wellness. She draws her inspiration from nature and makes sure to explore the outdoors on a regular basis. Indiana loves experiencing new things and sharing with others what she learns through her writing. You can chat with Indiana on twitter @IndianaLee3