What is Alternative Investing? Here are 4 Key Benefits of Investing in Alternative Wealth
According to a recent study, 72% of accredited investors in the United States agree that today’s global markets require investors to be more flexible and responsive to changing conditions in the marketplace.
After bond and stock markets fell enormously in 2020, the need for investors to maintain greater control over their assets, as well as to diversify their portfolios to insulate from market downturns, has never been more clear.
This is why accredited investors are turning toward alternative investments to expand their portfolios, maintain their wealth, and pursue innovative opportunities for growth.
In short, alternative investments describe assets outside of the traditional markets for stocks, fixed income, or cash—often encompassing private equity, commodities, tangible assets, and real estate. Investors turn to these assets to diversify their portfolios and enhance their returns, since assets like equity in private corporations tend to yield much higher profits.
Because alternative investments typically have a low correlation with standard asset classes—meaning their value usually moves counter to the stock or bond markets—alternative wealth provides an effective hedge against inflation and remains a leading strategy for aggressive growth.
Of course, one obstacle frequently stands in the way of accredited investors expanding into alternative wealth, like private equity. The investment floor for most private placements begins at $50,000, preventing the average investor from diversifying their portfolio across several ventures.
When investing in an alternative wealth fund, however, accredited investors are able to spread their investments across an array of opportunities, from private equity in emerging startups to investments in high-return and seasonal commodities, like oil and natural gas. By bundling private equity with tangible assets, a fund pairs long-term profits with fast returns, forging an off-Wall Street option for accredited investors to preserve and grow their wealth.
With a frequently unpredictable stock market—challenging some investors’ ability to regenerate their net worth if exposed to a market downturn—alternative investments are quickly becoming the preferred option for established investors to diversify into more innovative opportunities.
Joining a fund has many benefits, including:
Access to exclusive private placements.
Among the largest barriers for acquiring alternative wealth is the ability for investors to actually find and vet emerging private placements. How do you source startups and ventures worth investing in?
Even more, once invested, private equity poses more risk than a traditional investment portfolio. Private equity is illiquid, meaning investors can’t sell off their shares like one would in the public market. Often, investing in private equity requires accredited investors to wait a few years before a venture returns sizable dividends, and the risk of failure is much greater than a publicly traded company.
This is why alternative wealth funds work diligently to source, vet and invest in sound ventures positioned for significant profits. Investing in an alternative wealth fund mitigates many of these risks and gives investors access to exclusive private placements most couldn’t locate on their own.
At Alternative Wealth Partners, for example, we source emerging opportunities in nearly every industry, so clients can pair their needs and goals with appropriate ventures, from emerging startups in innovative new markets—like pharmaceutical and therapeutic cannabis—to consumer goods and manufacturing and distribution.
The collective nature of an alternative wealth fund also helps to mitigate much of the risk associated with private investment, insulating investors from significant losses if a startup fails to become profitable. Because Alternative Wealth Partners invests in all of the ventures we present to clients, our interests remain mutual, transparent, and beneficial.
Private equity bundling.
Allocating significant wealth to multiple ventures may be a less tenable investment option than a traditional portfolio for some investors, since most alternative investments are illiquid. Even more, the traditional investment floor for private placements—usually $50,000—may prevent the average accredited investor from diversifying their portfolio across multiple ventures.
Consider, for example, a typical accredited investor: Most investors are owners of small or medium-sized businesses making anywhere between $250,000 to $1-$3 million each year. They’re likely to be experts in their field and area of business, but don’t have the time to learn more about additional industries. Some probably rely on a broker or financial planner to make decisions for them, and most probably want better control and decision making over their assets. With some wealth secured in a traditional retirement plan or investment portfolio, he or she may also want to invest some of their cash in more lucrative investments, like private equity or commodities, to grow their wealth beyond the typical capabilities of an average portfolio.
Investing in multiple private placements on their own may be a risky move, and investing in an alternative wealth fund would mitigate many of these risks. With one investment, an investor can spread their assets across an array of private placements, seeking profits from emerging markets while bundling their private equity with alternative opportunities in commodities and consumer goods.
High returns from commodities, like oil and natural gas.
Some alternative investments—like shares in a private company—may take time to return dividends, which is why many alternative wealth funds like Alternative Wealth Partners also invest in tangible assets or proven high performing commodities, like oil wells and natural gas drilling.
When we work with clients, for example, we work on a personal basis to develop custom portfolios or to pair them with targeted investment opportunities in tangible assets or commodities. In the commodity sector, we perform due diligence and invest in proven ventures so our clients can source aggressive strategies for growth.
If a client, for example, would like to invest a discrete amount and receive returns quickly, we can find and pair their investment with a proven high-performing oil or natural gas operation in need of investors. Once operational, the drill will return significant profits to clients in a matter of months.
Being real assets, commodities like natural resources are often considered an inflation hedge, meaning that they can defend against decreases in purchasing power from traditional investments. As inflationary pressures prop up prices in the normal economy, commodity prices also increase, allowing investors to realize a high return on their initial investment.`
Protection from stock market volatility.
After the 2008 economic crisis, many investors with assets in traditional portfolios watched as their net worths vanished. Since, many of those investors have had the opportunity to reestablish their wealth and recuperate what was lost.
After the COVID-19 pandemic, the threat of exposure yet again to global economic collapse has resurfaced, leading many investors to question whether they could again rebuild their wealth if affected by a serious economic downturn.
Investing in alternative wealth puts that burden on the innovative ventures one joins, and alternative wealth funds provide accessible, trustworthy, and lower risk pathways to enter into the private arena.
Consider, for example, this investor: Retired or nearing retirement with a self-sufficient family, owned assets, significant savings and $10 million in a traditional portfolio, an investor of this type ought to consider the impact on their net worth in the event of an economic downturn. While they have acquired enough traditional wealth to sustain themselves, the chances that they may be able to rebuild their lost net worth in the event of a serious downfall is unlikely.
With no immediate need for liquidity in their investments and enough wealth to allocate their assets in the alternative sphere, an alternative wealth fund could help to better optimize their portfolio and achieve significantly more value out of their investable assets, securing a pathway toward wealth generation regardless of the stock and bond markets.
Invest in alternative wealth with Alternative Wealth Partners
Alternative wealth investment is increasingly a choice pathway for high net worth individuals to seek new, off-Wall Street opportunities for their assets.
Alternative Wealth Partners pulls back the curtain on private equity, giving our investors access to a diversified portfolio of exciting ventures, high-return commodities, and emerging opportunities—all with a single investment. We source investments in nearly every industry to match your goals, and we work with you to build a diversified portfolio, whether you’re focused on building assets to preserve wealth or pursue growth.
If you’re interested in joining our fund, contact us to learn more and schedule a consultation.