When you think about investing, the most common instruments you would think of are stocks, ETFs, REITs and bonds. However, there are alternative investments that exist beyond these conventional financial assets.
What Are Alternative Investments?
Alternative investments are defined as investments that perform differently from stocks and bonds in the public equity market. They are a means for investors to diversify their investments.
As they perform differently from the public equity market, alternative investments give you a chance to reduce your exposure to market volatility.
Before diving into the types of alternative investments, here are some articles to introduce reasons why some investors venture into alternative investments.
Robo-advisors are an increasingly popular way of investing in ETFs. They are a digital financial advisor that constructs and rebalances a personalised portfolio for you based on strategic algorithms or mathematical rules.
The logic behind Robo-advisors is to avoid the behavioural bias that sways retail investors to buy or sell stocks based on impulse or market changes. Automating the portfolio construction and rebalancing process increases the probability of higher long-term returns.
Here are some articles you can read about Robo-Advisors, or using them:
Overseas properties remain an attractive form of alternate investment for the investor looking to make recurring passive income.
For property investors who are already heavily exposed to the Singapore market, investing in property overseas is a great way to diversify or increasing returns.
Here are some articles you can read about overseas property investments:
Peer-to-Peer (P2P) Lending
Peer-to-Peer (P2P) lending is the lending of money to individuals or businesses through online platforms. Lenders are able to use their money to finance others’ loans in return for interest on the money lent out.
This allows an individual or company to obtain a loan from other individuals rather than borrowing traditionally from a bank.
For the lenders, this is an opportunity to gain higher returns and expand their investment portfolio. However, P2P lending comes at the risk of borrower defaulting, and being unable to return the promised yield.
You can read the following articles to gain a better understanding of P2P lending:
Another form of alternative investment is the investment of tangible assets such as wine, watches, rare coins, stamps or even precious metals.
Here are some examples and articles about commodities investments you can read:
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