When we think about investing we normally picture in our minds a variety of stocks, bonds, and mutual funds. It is crucial to remember however that limiting ourselves to these common investments can be the biggest risk one can take in these harsh and uncertain economic times.
It is always important to add diversity to your investment portfolio, and since different investments behave differently under varying economic conditions, it is always a good idea to have such investments that can support and even temporarily replace those investments that tend to wither in the worst of situations.
The answer then to a risky situation lies in expanding your investment options and seriously looking at including a few alternative investments in your portfolio; this may be the best way forward for you in 2012 and beyond.
What are Alternative Investments?
Many alternative investments are thought to lack liquidity and are generally a bit more complicated for inexperienced investors. Usually you will find only wealthy individuals and investment corporations focusing on them.
In the majority of cases, these types of investments require a much higher minimum investment and the associated fees can be also be higher when comparing to ETFs for example. They are often a bit harder to market based on the fact that you cannot as easily measure performances.
They do however have less associated regulations attached to them and this has ensured a pronounced increase in alternative forms of investment in recent times.
Alternative investments are becoming popular and the point to remember is that they do not in most cases share the same kind of predictable returns as that of standard investments. In fact they can prove to be very profitable indeed under the right circumstances.
Perhaps this is the reason why many high net worth individuals and larger financial funds have allocated reasonable percentages as light as 10% of their portfolios to alternative investments like hedge funds. Other alternative investments include real estate and certain precious metals.
So what are the best alternative investments that you should be eyeing in 2012? Well – Exchange Traded Funds or ETFs offer an investment option that has a much wider appeal than either real estate or precious metals.
For one thing they are easier to get involved in and do not present the usual risks attached to alternative investments. Again the best approach is to diversify and in addition to an existing portfolio, ETFs can and do represent profitable assets that can be moved and sold when you need to. It is also very easy to monitor and track their value within a given time.
With exchange traded funds you have the flexibility of trading within the market or you can hold on to your investment for any duration you like even over the longer term.
Other exciting opportunities include and are not limited to investing in art, wine and renewable energy.
Now is the time to keep your options as wide open as possible. By including alternative investments into your portfolio you have a healthy blend of diverse investments that will effectively help you to cover all your financial bases in years to come.