Spring is in the air, the first quarter is well and truly behind us and we can safely say that 2018 has reached cruising altitude. So now is the ideal time to take a look at how the year is shaping up from an investments perspective. Alternative investments almost need a new name, as in today’s financial environment, the exception has become the norm.
After all, according to a recent report from PWC, almost a quarter of Sovereign wealth funds are now sunk into alternative investments. The same can be said for approximately the same proportion of all pension funds. Talking about alternative investments in general is well and good – but which are the ones that are attracting the most interest this year?
1) Buying gold
What could be safer than gold? Whatever else happens in the world, it will always hold its value, so how can you go wrong? In essence, you can’t, and every investment analyst will agree that gold should form part of your portfolio. Before you rush out and invest in gold bars, just remember that the very quality that makes it so safe also means you are not going to get overnight returns. Slow and steady wins the race, and that is very much the attitude you need to carry into gold investment.
2) Join the real estate party
Gold might be the traditional investment of choice for kings and emperors, but ask the average hard working man or woman, over the past century about the best way to invest, and they will say “bricks and mortar.”
This strategy has certainly been bringing home the bacon over recent years, and the property market across the US and in the UK has remained largely buoyant when most other avenues of investment have stuttered. The growing popularity of home makeover and fixer-upper shows on TV has fanned the flames, and suddenly anyone with a few thousand to invest is becoming a private landlord.
The property market remains strong, so the argument in favor of real estate is a compelling one. However, do not fall into the trap of thinking property makes a good diversification strategy. For the private investor, simply owning the home you live in provides more than enough exposure to this particular investment market.
From stamps to fine wines to classic cars, there is a growing trend towards investing in collectibles, the logic being that they will appreciate in value with the passage of time. This can be a dangerous road to go down. If you enjoy works of art and classic cars, then by all means enjoy your hobby, but it is dangerous to assume you will automatically make a profit from them.
The classic car market, in particular, can be hazardous. Around 20 years ago, the bubble burst spectacularly, and you also need to factor in the costs of maintenance and storage. Also, if you enjoy using your investment, be prepared for the fact that wear and tear will have an impact on its value.