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Are Alternative Investments Right For Your Portfolio?

In recent years it would be difficult to read any financial newspaper or website without seeing headlines about “alternative investments”. This term is rarely defined by media accounts but seems to encompass hedge funds, private equity, infrastructure investments, as well as real estate.

Chances are good that if you turn on the prime time news on any given day or pull up your favorite newspaper on your iPad one of the top stories will relate to emerging risks around the world.

If you’re human you couldn’t possibly have avoided thoughts of what you might do if you had won the recent Mega Millions lottery of over $640 million.

While our extended longevity should be greeted with gratitude for the possibility of enjoying a longer life with our grandchildren, many retirees are approaching it with trepidation, wondering if their hard earned assets will be sufficient to fulfill their vision of a good life for the rest of their life – however long it should last.

Young families with an eye to the future are faced with a daunting choice – to save earnestly for a secure retirement or to save for their children’s education. Can you do both?

In my opinion, it is impossible to predict future stock market returns. Investment models can produce hypothetical returns but they can’t account for future events. So, in my opinion, investors who manage their investments based on market performance or what they perceive as opportunities for better returns have very little control over the outcome.

After market-risk and inflation-risk, which investors take great strides to mitigate through sound investment practices, taxation-risk presents the biggest obstacle to building wealth. A sound investment strategy not only seeks to generate returns on your capital, it also seeks to preserve as much of your capital as possible to keep it working for you.

Modern investing is a complex web of considerations. Properly growing and monitoring investment accounts requires an in depth knowledge of markets, economic cycles and the discipline to achieve desired goals. Knee-jerk emotions should ideally be removed from decision making or at least minimized.