Why You Should Add These 4 Alternative Investments To Your Portfolio

People usually earn much more from their good investments than from their great jobs. The reason for this is simple: investments can grow at an astonishing rate. This occurs for two primary reasons: in a short-term investment, leverage in a financial market allows investors to enjoy a high ROI, and in a long-term investment, investors benefit from the compounding interest of the time value of money.


rawpixel / Pixabay

While there is much to be said for investments as a way to build substantial wealth, it’s important to think beyond traditional investment like cash, stocks, and bonds. You should also consider the benefits that alternative investments can add to your portfolio–such as opportunities for higher returns, a hedge against inflation, and diversification. In other words, you don’t have to just rely on mainstream investments to grow your wealth.

Cryptocurrencies, foreign currency, peer-to-peer lending, and private equity are four different ways to invest in assets that aren’t mainstream.

Invest in Cryptocurrencies

Cryptocurrencies–also known as digital currencies, virtual currencies, or alternative currencies–are based on decentralized control.  Since these currencies are decentralized, relying on encryption techniques and P2P networks to process transactions, they are markedly different from traditional currencies. Electronic and cash currencies, like, say, dollars and euros, are based on a central banking system.

Because of this difference in how the currency is controlled, cryptocurrencies have become something of a global phenomenon, and if you would like to learn more about how widely they are accepted check out Cryptocurrency Ban, a report on which countries feel threatened by cryptocurrencies and which ones see it as the future of money.

The reason cryptocurrencies have become so popular across the world is because they work remarkably well compared to traditional currencies. They solve most of the problems associated with the current fiscal systems. Central banks can’t impose fees, delays, restrictions, or limitations on the flow of currency, and governments cannot interfere with or confiscate the currency (which is what happened in Cyprus in 2013).

Today, you’ll find that most governments, large software companies, major accounting firms, central banks, commercial banks and other institutions are researching cryptocurrencies, publishing papers about them, and even starting their own blockchain projects.  

As an investor, you can use a buy-and-hold strategy to grow your wealth with cryptocurrencies.

Capitalize on Foreign Currency
Foreign currency exchange trading is often referred to as forex. This financial market is global and not restricted to a central location. Business is transacted across the world by participants using phone and electronic communication networks (ECN). Since currencies are always in high demand, the market is open 24 hours a day from 5 pm eastern standard time on Sunday until 4 pm eastern standard time on Friday.

As an investor, you can make money by buying and selling different currencies. These are conveniently arranged in currency pairs. So, for instance, if you were interested in buying euros with dollars, you would look up the price of an EUR/USD pair to determine how many dollars you would need to buy a euro.

Participate in Peer-to-Peer Lending
Peer-to-peer lending, usually referred to by its abbreviations P2P lending, is simply the practice of lending money to people or businesses through an online lending service. If, for instance, someone needs money for their business, they can borrow it by going to a P2P lending website and applying for credit. Once their application is approved, they are assigned a category, and this will determine the interest rate that they are eligible to receive.

As an investor, you will profit from the interest rate on the money you’ll end borrowers.

Advance Company Growth with Private Equity
Private equity refers to capital that isn’t listed on any public exchange. Private equity firms, known as PE firms, are created by investors who want to invest in companies directly rather than buying stock. These investors don’t buy part of the company, but the whole company.

Usually, you need to be a high net-worth investor to participate in PE. As an investor, you will be helping promising companies get the funding they need to grow their business.  

In closing, regardless of your choice of type of investment, remember that all investments come with risk. You should learn as much as you can about an investment before buying it. Investment is not gambling, and you need to have a clear idea about market momentum to understand exactly why you expect your money to grow.

Share with your friends
To report this post you need to login first.

Leave a Reply

Your email address will not be published. Required fields are marked *