What Are The Four Alternative Investments To Watch In 2020?
Four Alternative Investments to Watch in 2020
I hope that you didn't think that investing should be limited to the buying and selling of mutual funds and exchange traded funds, bonds, the buying and selling of stocks, or EFT's. There is an ever increasing and fast-growing and rising alternative investment options, if you really want to achieve genuine diversification. You really cannot ignore this fact!
From Paper Money to Gold You Can Hold
Trillions of dollars are globally deployed by investors in alternatives, and in the years to come, the following alternatives are likely to take center stage in capital markets. This is all thanks to their appeal to sovereign and public pension funds. What did we do about this? We decided to analyze global trends which are immensely impacting the industry, and I believe these four alternative investments are most likely to perform particularly well and outperform other investment opportunities in the coming years in-spite of growing recession speculations and high global and geopolitical tensions arising due to the current and uncertain circumstances.
But first, what are alternatives?
What Are The Alternative Investments?
These are simply investments outside the traditional and well-known classes of cash, stocks and bonds. That is all there is to it. Therefore, one can classify everything which falls under the banner of alternatives as commodities, real estate, private equity, fine art, wine and precious metals. This is broadly speaking by the way...
If one really wants to speak of legitimate investment vehicles that have the capability of padding your portfolio by adding real and true diversification, alternatives are definitely the best! Why am I saying this? This is because of their primary benefit in redistributing risk, such that one's returns are not correlated to the performance of stock market. What alternatives provide is simply a buffer against such uncertainty in the economy and also declines in the stock and bond market. We are all aware of the economic situation we are facing due what happened and still taking place due to corona-virus.
How do Alternatives Operate?
They operate much the same way as traditional stocks and bonds, with their basis to successful investing of starting small and scaling as you go. This is key to any successful investing, I mean the starting small part of it; then one can diversify across a wide range of asset classes. This has the ability to maximize returns and the risk is not over-exposed to the volatility of prices.
1. Precious Metals
What are Precious Metals and how are they performing in the global economy?
Simply put, precious metals, such as gold and silver, have a lot going for them; especially during this 'time' of covid-19. They are by far the best and most reliable tangible hedges against inflation.
They are highly liquid and what they offer above other investment options is that they store value safely over time. One can even call them as “rescue assets.” Why? Because precious metals have an immense ability to bail out one's portfolio in times of economic downturn. What a time to consider investing in precious metals.
We all know of the wide speculation of a looming recession in the year(s) ahead, including an uncertain market sentiment; silver and gold are definitely the best and exceptional hedges against stock sell-offs. It is however of paramount importance to take note of fees, if you opt to take to the route of gold ETF's or the route of mining stocks. In order to save on fees, what investors can do is simply to gain exposure to gold through direct and physical purchasing of gold.
2. Equity Crowdfunding
Just as many would consider owning a business as an “alternative” investment to conventional investment options, so too is owning a slice of someone else’s business. How big the slice of someone else's business you would like to own will be influenced by a number of factors. In these present days, a growing and considerable number of startup businesses and other businesses are selling shares. They are selling some of their company shares on crowdfunding platforms, such as AngelList and SeedInvest.
There is a considerable risk involved in investing equity crowdfunding. What are the risks? You see, just in case that the company you're investing with flounders, so does your share in the firm. However, if that company succeeds financially, this can result in considerable gains, specially for early stage investors in crowdfunding.
3. Cryptocurrencies
There has recently been high speculation of stock market downturn and an impending global recession. This has immensely put cryptocurrencies among some of the best alternative investment opportunities. This comes with digital currencies having now become excellent stores of value that are untethered to stock performance and top performing indices like S&P 500 and the Dow Jones.
Take a good look and see through the sensational headlines and media frenzy, you will notice that cryptocurrencies's regulatory environment is surely maturing on a global scale. This is evident even to those who do not know or understand anything about cryptocurrencies. It has become the talk of the town! With the obvious and highly anticipated trading infrastructure improvement, standardized regulations, retail and institutional players driving adoption, one can obviously expect cryptocurrencies to perform well throughout the early days of 2020.
4. Real Estate
It is without a doubt that physical real estate remains one of the world’s leading and best millionaire-makers. What is required when one invests in real estate? Some say that investing in real estate requires a lot patience, skill and a little bit of luck, but it is a relatively safe investment vehicle that performs relatively well during all stages of the economic cycle. With major housing market corrections becoming comparatively rare, only 7% of real estate market dips can cause a decline in real prices of 20% or more.
What’s Driving The Alternatives Market?
What can we expect in 2020? The 2020's will see radical changes in the asset management landscape. Why are we saying this? It is because PwC market analysts attribute alternatives’ rising tide to three major catalysts. Who are these major catalysts? These are:
- the shift to individual retirement plans,
- new sovereign investors emerging in the game,
- and the increase in high-net-worth individuals from emerging markets.
What does this mean? It means that by the end of this year of 2020, the alternative asset market is forecast to reach as high s $15 trillion. As far as investors looking to capitalize on this burgeoning industry, alternative assets such as precious metals, real estate, cryptocurrencies, and equity crowdfunding could prove to be good if not best places to start.
Please note that the information provided here is not investment, tax or financial advice. Nevertheless, we advice that you should consult with a licensed professional for advice concerning your specific situation.
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