Alternative investing is any non-traditional form of investment that ranges from cryptocurrency to artwork to mineral rights.
Your traditional investing includes putting money into bonds, stocks, cash, and equivalents, as well as the return from interest earnings, capital appreciation, and dividends.
Unconventional investing is typically shrouded with risk, but the margins for return can be quite large and worth your while.
Why Stray From Traditional Investing
Traditional investing is less risky than the alternative, which is why investors should not abandon it entirely. With that said, complementing traditional investments with alternative investments is a great way to diversify investments even more. Ultimately, expansive diversification mitigates risk and fortifies your portfolio in the midst of volatility.
The options are narrow in scope for traditional investments. If you have a particular interest or knowledge about the following categories, that may be even more reason to extend your investments.
Alternative investments have little correlation with the stock market, but the value can be difficult to ascertain and investments offer less liquidity than do traditional investments.
Typically, only accredited investors can invest in alternative investment platforms, but that may be changing as new platforms open up alleyways to invest in this asset class.
Types Of Alternative Investment
Just to list a few forms of alternative investments: Real estate (mutual funds, equity, partnerships, investment platforms), tax lien certificates, commodities, farmland, cryptocurrency, merchant cash advance, timberland, mineral rights, intellectual property, privately underwritten mortgages, structured settlements, art, wine, coins, venture capital, peer-to-peer lending, hedge funds, and annuities.
There is an overwhelming number of avenues in which your money can go down. These are the most prominent forms of alternative investing:
Hedge funds are formed by investments pooled together and managers utilize various strategies to grow the account and boost return. Some of the strategies include arbitrage and equity long-short.
Hedge funds invest in anything from real estate and currencies to merchant cash advance contracts and derivatives. These accounts are less regulated than mutual funds and are a fairly expensive investment. In the past 20 years though, the return has been significantly increasing.
If you are an art connoisseur or have a growing collection, this alternative investment may be fitting. The uniqueness of each piece dictates the value and therefore price. Costs can be extremely high and illiquid, but the aging factor pays off.
Exclusivity leads to higher prices, but to higher return also. The fame of the artist is also an important factor. There are platforms and resources out there that can help you make an informed investment choice – and one that does not cost an arm and a leg either.
Merchant Cash Advances
Investing in MCA financing comes with relatively low risk. A merchant cash advance is a form of business lending in which a lump sum is exchanged for a promised percentage of future sales. Payment varies as sales fluctuate, and it is a short-term loan. It’s also one of the top new alternative investment opportunities.
Investors can utilize platforms that will match them with the highest qualified funder companies. There, investors have complete autonomy over companies that their money will be pooled and lent to. Return can be as quick as just a few days.
Pros and Cons of Alternative Investing
This investing traditionally has a tax advantage. For instance, the investor may receive tax credits or tax carryforwards that can be applied to income.
The return is not associated with the stock market, which can be comforting. At the same time though, the markets are less efficient so opportunities may be more prevalent.
Alternative investing can be enriching if the subject matter is interesting or you are particularly knowledgeable about it.
Some cons of alternative investing include higher risks that can sometimes even be hidden.
There may be some tax consequences correlated with particular investments and these investments are generally more illiquid — or speed that an asset can be bought or sold at a price reflecting its true value.
Why MCA is a Top Alternative Investment
The interconnectivity of technology means platforms that make alternative investments more accessible to investors.
Platforms like Supervest match investor portfolios outlining risk limits and other preferences so that a mutually beneficial match can be made with a reputable MCA funding company. Risk is carefully mitigated because no more than 5% of the investor’s portfolio will be funneled into a singular business at a time.
Because the term of MCAs are typically between 9 and 12 months, investor return can occur in as short as 3 days. Investors do not have to wait years for their investment to come to full fruition. Some investors simply have a distaste for traditional investing and can grasp the alternative options better. If you’re an accredited investor looking to cash in on the merchant cash advance boom, visit our investor sign up page.