Balance Portfolio with Alternative Investments

Investing in Alternative Asset Classes

It’s never easy to predict what markets will do in the future. That’s why it’s best to maintain a well-diversified, balanced portfolio to weather the ups and downs over the long run.

But what exactly is a balanced portfolio? Many investors are already familiar with stocks and bonds.

Thus, the 100 minus age rule is quite popular. This is the notion that you should take 100 minus your current age. The result is how many percent of your investments should go towards stocks. And the remaining percentage should be allocated towards bonds.

One represents a class of investment called equity, and the other is a type of fixed income. Exchange-Traded Funds or Mutual funds are a collection of individual stocks and bonds on the public markets. Additionally services such as Motif can be an alternative to investing in traditional mutual funds.

But if you’re a serious investor, sooner or later you’ll probably run into the fascinating world of alternative asset classes which are investments not represented in the traditional stock and bond financial markets. Here are some examples of alternative assets to invest in.

  • Farmland
  • Private equity
  • Mortgage
  • Real Estate
  • Fine art
  • Hedge fund
  • Commodities
  • Hard asset lending
  • Derivative contracts
  • Precious metals

These types of assets are often favored because their returns have a low correlation with those of traditional asset types such as stocks and bonds. Do alternative investments work?