Alternative investments: from ‘too risky’ to ‘safe haven’

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High net worth individuals are becoming increasingly concerned about the possible failure and collapse of the global political, financial, economic and monetary systems. To hedge against uncertainty like Europe’s ongoing debt woes, Brexit delays and the economic and fiscal concerns in the United States, these individuals are investing in alternative or non-traditional tangible and intangible assets to preserve their nest eggs.

“Traditional financial investments in capital assets like stocks and bonds become far less attractive during times of volatility,” says Michael Ferendinos, owner of The Risk Tower. “Alternative investments diversify portfolios, provide significantly greater returns relative to traditional investments, and often also invoke emotion considering that investors are collecting assets that they are passionate about. The features that make these investments different when compared to traditional forms of investment are their relatively low liquidity, high purchasing costs and difficulty when it comes to valuation.”

There is a broad spectrum of tangible assets that investors can choose from, ranging from the more standard assets like gold and silver, diamonds, jewellery, watches, cars and real estate to more exotic assets and collectibles like artwork, wine, antiques, rare stamps and coins, Egyptian artefacts and even comic books. Whilst tangible investing refers to buying assets that have a physical form, there are also several intangible investment options available to investors. This includes hedge funds, private equity, venture capital, derivatives and more recently cryptocurrency.

To read more about the safe haven of alternative investments, download the April issue of RISKAFRICA magazine now!

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