What are Alternative Investments you ask? The short definition is that they are any investment not includes in a traditional portfolio of Stocks, Bonds and Cash. Alternative Investments include Real Estate, Commodities, Hedge Funds, Alpha only funds, Currencies and others.
Alternative Investments usually have higher risk, lower liquidity and higher average returns. Because of their risks they were usually only available to Accredited Investors, those with high net worth and high incomes. In the past few years these walls have been crumbling and Alternative Investments are increasingly available to all investors.
Real Estate
- Rental Properties - My friends Richard and Mike own a series of apartments that they rent out for income. They manage the properties themselves and have to keep them rented, deal with tenant problems and provide maintenance on the properties. Craig owns the buildings his wife's business uses to help treat troubled teens. Her company deals with all the property issues.
- REITs - My parents own Developers Diversified Realty a REIT (Real Estate Investment Trust) that pays them regular income and has appreciated nicely through the years. I own an EFT (Exchange Traded Fund) that is an index of REIT companies.
