Another factor to consider is investors have found that in periods of financial turmoil many alternative investments may be more volatile and have a higher correlation to traditional investments (such as stocks) than they anticipated.

This negates one of their perceived advantages.

Investing in Alternative Investments

Most investors should concentrate on sound investing principles such as asset allocation and proper diversification with an emphasis on value investing.

Don’t be distracted by the lure of high returns and risky endeavors unless you fit the profile of someone who needs additional diversification.

Investing in alternative investments can be rewarding for those with special expertise and investors who can afford the high expenses and risk.

But, unless you are an investor with a high net worth or an extraordinary understanding of a particular collectible or asset, dabbling in alternative investments can be risky and a costly endeavor.

This article was republished with permission from Arbor Investment Planner.