Investing is a broad topic with many different avenues and terms to understand. Alternative investments are just one such term and avenue. It’s important to understand what an alternative investment is, however, and how it can be used to your advantage. This is an especially important term to understand due to the growth and variation that the sector is seeing.
What is an Alternative Investment?
An alternative investment is an asset to your investment portfolio that does not fall under the traditional investing categories of stocks, bonds, or certificates. It can be anything from collector’s vintage baseball cards to rental properties to Mortgage Investment Corporations (MICs). These forms of assets can carry a bit more risk, and it can be sometimes difficult to value these investments — especially in the case of things such as priceless collections. These investments aren’t considered as mainstream as traditional investments and are generally a method commonly used by more sophisticated investors.
Why have we seen such growth in Alternative Investing?
It seems the main factor behind the growth in the alternative investments market has been the low yields in conventional investments like bonds. After the market crisis in 2008, investment professionals began searching for methods of success outside of traditional means. As investment professionals look to find alternative assets, we see a blending of traditional and non-traditional investment methods in portfolios. This isn’t an investment method shared by all professionals, but we understand the great importance of a diversified investment portfolio.
With more interest and demand in the alternative investment sector and projected global bond yields to remain on the lower end of the spectrum for a little while, it’s no wonder we see growth in the sphere. Alternative investments require more active management as opposed to passive management, making them more attractive to investors. A blend of both traditional and alternative investments seems to be a popular and growing trend.
What do Alternative Assets mean for you?
An alternative asset is a great way to diversify your investment portfolio and lower risks associated with volatility in one specific market. For any sophisticated investor, they’re an important topic to bring up and see if they’d be something that benefits your investment goals and strategy as well as your comfort levels. Many people find themselves investing in alternative means purely out of passion, as is the case with a priceless art collection. With a collection, the liquidity of the investment is difficult to know as the value of the investment is dependant on its ability to sell.
At Cooper Pacific, we believe in the importance of a well-diversified investment portfolio. MICs are an alternative investment that could be the perfect fit for you. Our team can bring the experience and expertise needed to help you feel confident in your decision to diversify your investments into this form of alternative asset. If working with an MIC feels like the right fit, or if you have any questions, get in touch with Jordan by email or call (250) 475-2669.