As the world economy continues to regain and hold economic ground, the consumers from around the globe are discovering that they have more money to invest. Albeit a welcome change from the days of the financial crisis, accompanying more investment money is a rising number of opportunities to invest. Determining which of their alternatives are the best, is the new challenge for investors.
With an increasing number of opportunities arising, many investors are often left overwhelmed by an abundance of information and constantly questioning whether to invest or not. Aside from the traditional selection of investing options, the investment community is focusing an increasing amount of time researching new opportunities and listening to other investors review their investments and share their investing experience with alternative investments, etc.. By listening to these first-hand accounts from the international investment community, apprehensive investors are recognizing the advantages of an alternative investment strategy and finding the confidence to introduce them to their portfolio.
Since the days of the financial crisis, investment providers have come to the stunning realization that they must swiftly address the evolving needs of their clients and introduce more transparency and accountability. To accommodate the growing demands of investors, many companies are preparing and distributing investor testimonials and reviews that can communicate the fact the investment firm is delivering on their promises to investors. This sort of direct communication, although obviously self-serving, is an important step in establishing credibility and building a relationship with new investors.
The mistaken belief that investing with a big name investment firm is somehow better than partnering with an asset management firm, is preventing many investors from enjoying access to leading alternative investments and investing opportunities in emerging markets. With that being said, digital communications between investment providers and investors, as well as peer to peer investor interactions, are encouraging and supporting a shift in the way people traditionally invest their money. Moreover, these improved communications will help the investment community address the challenges they encounter, when considering alternative investments.
Developing an effective strategy for investing requires that you establish a set of rules and procedures, that are based upon the answers to tough questions like: What are you comfortable with? What are your risk factors? How much do you have to invest? What type of return are looking for? How long of a time-frame are you willing to wait? Are you going to manage your investments yourself or through a broker? Obviously, the answers to these questions are likely to be a little different for every investor. Nevertheless, establishing a set of pre-determined rules and guidelines will give you a really good idea of the direction you are going, as well as the path you must stay on; in order to be successful.
You may want to incorporate some of the established and very popular ways to invest, such as the buy and hold strategy. In this case you purchase with a known timeline, but understand that the markets will go up and down and have a certain volatility. Obviously the ideal scenario will see markets consistently rise over time. These are mainly reserved for longer-term payouts and (often) smaller risk investments. There are also Mutual Funds and ETFs (Exchange-Traded Funds) where you are able to purchase small amounts of shares in several companies (and sometimes all of the companies in an index) in order to grow with the market.
Another option worth considering is nontraditional investments. In short, that means any investment that is not stocks, bonds or cash. Some of the more common alternative investments are gold, wine, coins commodities, shipping containers and/or real estate. Many of these alternative investment strategies are aimed at balancing the risk of stocks by investing in hard, tangible assets. By investing in “real assets” your money is spent purchasing real things that you can keep, store or exchange.
It has been my experience that a sound strategy for investing will include investments in a handful of alternatives. In doing so, I believe that it provides a better chance of choosing a good investment that operates within your tolerance for risk, while also creating wealth. As always, your risk management is something only you can set for yourself. I suggest that you begin by writing out a set of rules and procedures that you want to follow for all your investments. This way you can keep track of what you are investing in, why and how it falls in your portfolio, without having to constantly reassess your financial plan each time a new investment opportunity comes along.