When looking into investing in your future, you may want to include alternative investments in your portfolio. If you started out investing in real estate you may just want to diversify and get multiple streams of income adding to your net worth.
Have you ever known anyone who collects stamps or coins? How about anyone who collects art or antiques? Baseball, football, or basketball cards? These are some forms of alternative investments. Traditional investments are investments that include stocks, bonds, and T-bills, and real estate.
If you are currently a real estate investor or invest in the stock market, you may have been told by your personal investment broker that you should be more diversified. If your portfolio is a little one sided you probably should listen to them. Heck, it couldn’t hurt. You may find you actually like going out and finding new treasures to add to your collection.
The big disadvantage of this type of investing is the fact that it may be difficult to liquidate if you should find yourself in need of some quick cash. Your broker may be able to help arrange a deal to sell but it will probably take some time to accomplish.
If your traditional investments are not bringing in adequate cash flow, you may be able to use your non-traditional investment assets as collateral for a loan from your friendly, neighborhood lending institution.
In this present economy, investing in stocks, bonds, and T-bills can be quite risky and you could stand to lose everything. If you are diversified then at least you have some net worth left when all is said and done. When the housing bubble burst, a lot of people lost their homes to foreclosure and this housing crisis continues even as we speak.
Another disadvantage of diversifying and getting into non-traditional investment opportunities is the fact that determining the full worth of your collection is difficult at best. There is no structured agency or agencies to help figure out what a certain collection is worth. Your best bet is to take it to an appraisor for a ball park idea of what it might be worth.
Criteria for determining the worth of a certain collection depends on several factors. Mainly, the condition of the various pieces of the collection and how well they are preserved. If the pieces have dates on them or some type of insignia they may be worth more than other collections. Investments like these are usually obtained only to increase someone’s net worth and not as a form of positive cash flow.
Diversifying your portfolio is the best way to go. Having assets that can be liquidated easier than others in times of crisis to give you access to quick cash is preferred. Having real estate investments that give you positive monthly cash flow make the inability of the alternative investments in your portfolio to become liquid quickly a non-issue. Some things in this life you are just supposed to be able to hold onto forever.