After the big crisis in 2008, many financial advisors give more emphasis on the importance of diversifying the assets in their clients’ portfolios. Consequently, they increase the possible alternative investment that can be taken by their clients. That leads them to find various assets that can serve as the alternative for your invesment.
What is Alternative Investment?
If you haven’t heard this term before, alternative investment is simply a non-correlated asset. In other words, the performance of this asset does not follow the performance of the traditional asset like stock and bond.
Most of the time, these assets even go in the opposite direction from the traditional assets. Thus, many analysts think that investing in these alternative assets is the most effective way to balance risk on your portfolio.
Besides, this investment will also give the investor a cushion in case of a stock market or bond investment meltdown.
Other than cryptocurrencies, you may also find alternative investments within your ETFs or even retirement investments. Other people may also be familiar with hedge funds as an alternative investment. Yet, hedge funds mostly only available for large investors.
Why Should You Have It in Your Portfolio?
Many financial advisers mention that having this type of investment is essential for retirement accounts. A financial advisor may even ask you to allocate five to 10 percent of your retirement portfolio to alternative assets.
Choosing The Best Alternative
If you plan to have cryptocurrencies as your alternative investment, then, you may face bumpy roads until the cryptocurrency market matures. Your investment performance will also highly affected by the ways you choose to invest in cryptocurrencies.
Or, you may also invest in traditional alternative asset like gold and hedge fund. These investments can provide good and solid returns, yet they may perform inconsistently.
The last option we have as an alternative investment is ETF consisting of companies with blockchain technology.
