5 Reasons to invest in real assets and alternative investments
Alternative investments are a secondary option to traditional investment assets. You might know about classical stocks but these help make your portfolio more resilient to crises. In this current economy, who wouldn’t consider this? Certain tangible assets, such as a Rolex watch or Louis Vuitton bag, can also be considered an alternative investment. At Splint Invest, it’s our mission to provide every private investor with convenient and quick access investments and tangible assets that hold their value. We describe the five most important reasons you should allocate your money to alternative investments.
Have a more stable portfolio with alternative investments
The road to wealth accumulation is often rocky due to various asset class volatility. Which can make many investors sweat. Volatility is seen as a risk indicator. It describes how stable your portfolio is. You can ensure your portfolio moves in the right direction with appropriate real assets and alternative investments that develop independently of the most common investment markets. Notice the fluctuation in your overall portfolio value decreases with the right assets. These investments tend to move independently and sometimes in the opposite direction to traditional markets, which helps mitigate volatility and gives you peace of mind.
Diversify your portfolio with alternative investments
A portfolio can become more stable through appropriate diversification. Imagine if you put all your eggs in one investment basket. You’ll be 100% dependent on the performance of this one asset class. However, you ensure the cluster risk is reduced by owning different asset classes and betting on other stocks within the respective asset classes. For example, if you focus exclusively on shares from the oil sector, your portfolio will depend solely on that selected industry's performance.
A well-structured portfolio not only takes into account different asset classes but also diversifies within these asset classes to be as independent as possible from short-term developments and still profit from the market. Real assets and alternative investments are a wonderful way to refine this diversification.
Gain more value from your portfolio with alternative investments
In principle, investors can invest in two categories: real or monetary assets.
Most people are over-invested in monetary assets such as time deposits, bonds, cash bonds, savings, or endowment insurance. The issue here is monetary assets depend on the respective debtor (i.e., bank, insurance company, etc.). If the debtor defaults, you’ll have a real problem. Inflation also ensures the money invested or saved becomes worthless. Even with interest, there’s often an actual loss.
On the other hand, many tangible assets tend to increase in value due to inflation. This also applies to certain company shares, which can pass on the respective price increases to their customers. Long-term investors should consider investing some of their money in real assets to avoid being too affected by inflation and to instead profit from it.
Create a more crisis-resistant portfolio with alternative investments
Real assets and alternative investments react more slowly to economic changes. At the same time, they’re limited goods that can’t be increased at will compared to monetary assets. Therefore, it’s natural that in times of crisis — especially in times of galloping inflation — people turn to investments with intrinsic value.
You can see this recently in the real estate sector. Investor money literally fled for fear of devaluation, and high profits were made. Investments in rare and high-quality whiskies or wines can also be very crisis-resistant. They’re not just made to numb the pain.
Align yourself with the elite
An investment’s success depends on the demand for the given good. Consider luxury items. They’re limited, so demand and price are high. Ultra-high net-worth individuals are in on the secret; in 2020, 50% of their assets were in alternative investments. In crises, especially inflation-driven ones, money moves from the bottom up. By investing in the right assets, you can profit from an asset class that tends to be driven primarily by wealthy people. Maserati, rare wines, a Picasso painting — the financial elite doesn’t purchase such luxuries without reason. Now, what was once reserved almost exclusively for the elite has changed — thanks to Split Invest. Add luxury assets to your portfolio in minutes and start investing like the upper class.