In today’s tough economic times, tough economic times, traditional sources of investments have become less predictable and in some cases profitable for the investor. This has led to the rise of alternative investments to help fill out the portfolio of the investor by letting them pursue alternative investment strategies to help offset the risks of the traditional market field.
Alternative investments are by definition investments that do not include stocks, bonds, cash or property which are consider the four pillars of traditional investments. These alternative investment ideas include a wide range of potentials from the more familiar such as precious metals and commodities to more obscure such as art, collecting certain desirable items (like diamonds, collectible watches), forestry, rare earth metals, etc.
During times of economic prosperity, these alternatives are traditionally used simply to augment the portfolio of investors. However, when times of economic prosperity turn to distress, especially with the current debt crisis gripping several western nations, alternative investments become far more prominent because they not only resist the downturn experienced by traditional sources of wealth, in the case of certain items such as gold or silver they can actually prosper.
The main reason alternatives are popular is because they are mostly based on items that have their own tangible value. Gold for example has inherent value regardless of the economic climate, the same as most alternative investments which makes them popular choices to hang onto when purchased inexpensively so they can be sold for a considerable amount when the demand peaks.
Understanding the power of alternatives means that you have to diversify your selections just like you would for your traditional ones. Perhaps the most familiar of these alternative investment funds is precious metals. In the late 1970s to early 1980s, gold in particular enjoyed a sharp rise in value in contrast to the high inflation, devalued stocks and overall crushing economic outlook which persevered until the mid-80s.
Investing in precious metals today has also become highly popular as the value of gold, silver and platinum have risen. This is based on the inherent value of the metals themselves as well as their finite quantity. In essence, a country can always print more money but there is only so much gold on the Earth. However, apart from gold and oil which are finite commodities, timber is also a source of alternative investments that is renewable, though like gold and oil it has increased in value over the past century.
Good alternative investment strategies also mean looking at collectable objects such as art, cards, wine, collectible watches, diamonds and the like. Unlike precious metals, the market for these types of collectable items will vary based on individual demand. Also, poor economic times does not necessarily translate to better alternative investment ideas as the supply of these items may be greater because of those looking to unload their collections during these troubled times, the demand for such items is less and the ability to sell may have to wait for years to pay off, if ever.