Alternative investments are intended to increase diversification, lower portfolio volatility while maintaining if not increasing expected return,
Diversifying into an alternative investment can take many forms from a traditional hedgefund investing in stocks to investing in fractional shares of classic art works.
Alternative Investment Benefits
Alternative investments are designed to offer investors the potential greater return and diversification when compared to traditional asset classes like the stock and bond markets. Ideally, Alternative investments should not directly correlate with traditional public markets and provide less volatility than stocks in general.
Until recently, alternative investments were generally only accessible to large institutions, pensions and endowments but there was limited opportunity for traditional accredited investors. Companies like Supervest are transforming alternative investments into an accessible market.
Alternative Investment Risks
Like any investment, a certain degree of uncertainty and risk is involved. Unconventional investments tend to offer less liquidity than do traditional investments. Alternative investing can be associated with higher fees in return for potentially higher returns. It is a high risk, high reward game. In addition to liquidity constraints, transparency can also be limited when investing in many alternative asset classes.
However, the Supervest platform has solved for much of the liquidity and transparency concerns of investors when investing in Merchant Cash Advances. With an investment in a MCA through the Supervest platform, remittances flow directly back to the investors account in real time per the merchant advance contract (either daily or weekly). The investors cash balance will be credited and can be redeemed daily with no lock ups on cash balances.
Alternative investing platforms are working to decrease risk by being transparent with price and by offering liquidity. Supervest allows for more control by allowing investors to self-direct different demographics and risk appetites, as well as create multiple different investment profiles at the same time.
Types of Alternative Investing
Some alternative forms of investment include real estate, real estate crowdfunding, fine art, peer-to-peer lending, cryptocurrency, commodities, social trading platforms, business lending, inflation-protected securities, international equities, fixed annuities, stable-value funds, emerging markets, hedge funds, venture capital, and a multitude of other platforms.
Real estate is one of the most common forms of alternative investing. Passive income from rent is fairly predictable. There are also tax benefits, stability, and longevity in real estate.
Some of the expenses and risks include maintenance, rent, insurance, tax, and security. It is a relatively straightforward process that can have a very high reward but at high risk.
Real estate crowdfunding raises money through social media that provides access to more investors. Investors have the option to become shareholders in a company or in a real estate property.
Hedge Funds are less regulated than mutual funds. The investments are pooled together in funds that undergo a variety of strategies to actively boost return. A high rate of return is the goal here.
These funds are typically only available to accredited investors. This is an expensive investment, but the return has been growing significantly within the last 20 years.
Commodities are common raw materials like energy, metals, livestock, and agriculture that are implemented in future markets. Trading commodities involves insight to the fluctuation of the price of a specific commodity. It is a fast-paced process.
Venture capital investing is lending money to a company so that it can go public. Investors are required to make large investments and the risk is extremely high, but so are the potential profits.
Investors are essentially buying into an equity position at a company, in hopes for the company’s success. It is risky because according to CB Insights, over 70% of startups fail at some point during this process.
Merchant Cash Advance
To refresh, merchant cash advances are lump sums provided to businesses that do not qualify for traditional small business financing. In exchange for upfront capital, businesses promise a percentage of their future sales to the merchant cash advance funding firm.
Depending on the contract, payments occur weekly or daily and they vary with the number of sales for that period of time. This is short-term financing and can be expected to be paid back within 6 to 12 months.
Investing in a merchant cash advance can be a high yield low-risk opportunity with the right underwriting funding firms.
Merchant Cash Advance as an Excellent Alternative Investment
Supervest’s mission is to mitigate risk by vastly diversifying investments. On our platform, investors are paid back daily or weekly on their remittance. This is what makes Supervest more liquid than other traditional and non-traditional investments.
Supervest is not a funding platform and does not manage investors’ money. It is a crowd-funding investment platform that provides investment opportunities by connecting accredited investors to an array of merchant cash advance participation opportunities.
How Does This Alternative Investment Work?
Most investors who syndicate in the merchant cash advance arena are only pairing with 1 funder, which leaves them exposed to that funders own business risk and the risk of the merchants that funder underwrites. This type of merchant cash advance investment leaves investors with virtually no control in the types of businesses or term of duration they wish to invest in. The funder ultimately makes those decisions. The blind risk associated with this venture turns investors off and rightly so.
Supervest is shaking up the industry. Investors indirectly fund businesses through intermediary entities, which deflects risk in a big way. Let us walk you through the process.
An accredited investor signs up with Supervest. The investor sets up a deal criteria profile on the platform. The criteria can include the amount desired to be invested on each deal, the desired industry focus, merchant credit score or length of deal term in months for example. Supervest has partnered with over 20 MCA funding companies that will offer deals onto the platform. If the deals offered onto to the platform fall within an investors criteria a match will be made and the investor will begin participating in that cash advance shortly thereafter.
Investors have the freedom to access their cash whenever they are paid through daily or weekly remittances in parallel with the contract repayment terms.
The investment is dispersed among businesses in amounts that are subject to the investor’s discretion. The investor is in control, securely and transparently.
Why Invest in an MCA?
The merchant cash advance industry has been gaining traction in recent years as merchants across the country continue to need working capital and traditional banks cannot meet their needs. Tech companies like PayPal and Shopify are even embedding advances into their core business. Unfortunately, until now, accredited investors could not access the Merchant Cash Advance return streams.
The gaining popularity of this type of small-business financing is good news for both investors and business owners. Investors can mitigate the risk they take on to a higher degree because the pool of small businesses keeps expanding, so there will be more businesses to choose from and more businesses to spread the investment across.
More businesses will have access to merchant cash advance financing because of the available funds from the increasing amount of investors on the platform.
If you are an accredited investor looking to diversify your portfolio with an emerging, high yield, and low-risk investment, you’ve come to the right place. Our platform connects your capital to the potentially enormous returns that the merchant cash advance industry provides. Contact us today to learn more about this new investment class.