Passive Investing Strategies for Sophisticated Investors

There are numerous investing strategies available. You can choose investments that are lower risk or ones that require less start-up capital. For more sophisticated investors and investors with higher net worth, a few passive strategies offer a higher return — you’ve just got to know where to look.

 

1. Venture Capital

Venture capital funds (VC) are pooled funds where investors’ capital is invested in start-up companies and small-to-medium-sized businesses with high growth potential. These companies borrow money from venture capital funds at a higher interest rate, making them high-reward investments for investors. However, with that potential for high reward comes high risk as well.

 

2. Hedge Funds

Hedge funds are another form of alternative investment that would be appealing to a sophisticated investor. These are pooled funds that are more aggressively managed and can be spread out across any business or industry to diversify the fund for the best growth potential.

 

3. Private Equity

Private equity funds are investments directly in a business. This investment strategy is commonly seen when an investor buys a private company or purchases shares in companies. Private equity could be in the form of a managed fund or an individual investor purchasing shares in companies that aren’t listed on a public exchange. This form of investment requires a longer commitment time, usually 3+ years.  

 

4. Peer-to-Peer Lending

Peer-to-peer lending (P2P) is precisely what it sounds like. A private investor will lend money out to a borrower at a higher interest rate than a traditional loan. Why would a borrower choose this? It may be the only option as it’s become harder and harder to qualify for many loans through the banks. A borrower may use P2P lending to borrow for a mortgage, a business capital loan, or even home improvements. There is great risk here, but it also offers sophisticated investors a lot of flexibility and control — which is what makes this alternative investment so appealing.

 

5. Real Estate

Real estate is a broad alternative investment strategy. You can purchase commercial real estate and manage it yourself. You could invest in a real estate investment trust (REIT) or a MIC. These kinds of real estate funds allow investors to capitalize on the growth potential of real estate without taking on the stress and time required to physically manage a property. 

A MIC is the perfect alternative investment strategy for a sophisticated investor looking for relatively stable or consistent returns. This is because the mortgage investment corporation’s nature is a pooled mortgage that then invests in various properties to diversify the fund. If you’re a sophisticated investor looking for a reliable and proven MIC, get in touch with Jordan on our team. When you choose a MIC, you’re further reducing your risk thanks to the team of experts who constantly inspect and evaluate the borrowers and projects that make up the pooled mortgage fund.