What is an Alternative Investment?
An alternative investment is a financial product other than stocks, mutual funds and exchange-traded funds (ETF’s). Managed futures products (also referred to as commodities or economic derivatives) are a widely traded type of alternative investment. Many alternative investments, including managed futures, offer the use of a high degree of leverage, which can produce either significant gains or losses.
An alternative investment is any type of investment option that is considered to be outside the mainstream of traditional investments. For the most part, traditional investments are defined as stocks, bonds, cash or money markets. By contrast, an alternative investment would include such options as real estate deals, private equity strategies, hedge strategies, commodities, or financial derivatives. In many instances, the decision to consider an alternative investment usually has to do with the idea of earning a substantial return in a relatively short period of time. Since the degree of risk associated with most alternative forms of investments is considered higher than the risk associated with traditional investments, the idea is that the return will also be higher. However, that is not always the case. Another traditional thought regarding an alternative investment is that the factors impacting the performance of traditional investments are much less likely to make any significant d
First, let us define what an “alternative investment” is. When the average investor is asked about his investments, you are surely to hear the most common answers. Usually, it is with a company’s 401K, an IRA, bonds, stocks and maybe even options. If he is a bit more diversified, it may include real estate or annuities. In the past few years, you may have heard about hedge funds or trading the Forex currency market as a form of alternative investments. While this is an “alternative” to mainstream ways of investing, it does not encompass all the varieties of investments available to those that want to look outside the box. An alternative investment can be any type of investment that can bring you an above average return from investing in areas outside the norm of stocks and bonds. It does not always have to be a form of tradable securities to be classified as an alternative investment. Examples of this would be rare coins, books, stamps, art, or even precious stones. I bet you did not k
