6 myths of alternative investing

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6 Myths of 6 Myths of Alternative InvestingAlternative Investing

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Myth #1: If you buy enough stocks, bonds and mutual funds, you’re sure

to have a diversified portfolio



You need investments that perform different functions in your portfolio.



Alternative investments may respond differently to market conditions than stocks or bonds, which may help improve portfolio diversification.



With diversification, in any market conditions, while some funds underperform, other will perform well.



Myth #2: Alternatives are too risky for ordinary investors



Any kind of investment involve risk. The more you know about it, the better your success.



There are many types of alternative funds - some are more risky in return for higher returns- some are less risky for modest returns.



Look out for investments that offers good security. e.g investments with land title deed as collaterals.



Learn as much as you can, do your research and pick the right one for you.



Myth #3: Alternative investments are only for the wealthy



It is true in the past when hedge funds were available only to investors of high net worth and to institution...but



The time have changed.

Now, individual investors can invest through mutual funds with minimal investments, lower expenses and daily liquidity.



Myth #4: This isn’t a good time to make strategy changes



Stocks and bonds are no less risky.

Stocks are based on future expectations which are uncertain.

Bond price falls when interest rates go up.



It is better to diversify to asset-backed investments with low corelation to minimise the risk.



Myth #5: Investors do not have access to their capital if they invest in alternatives.



Although many alternatives are less liquid than tradtional investments, the level of liquidity is specific to each investment type.



Some are as short as 30 days and as long as 15 years.

A long term investor has to weigh its potential returns and the portion that he is comfortable with.



At Wealth Solutions, we offer short term investments with tenure as short as 2 years.



Myth #6: Stock markets will always out perform alternative investments.



Most people think that stock markets offer a higher return.

Alternatives investments generally have low corelation with the state of economy; it fare better during recession.



It is prudent to have a mix of alternative and traditional investments in one’s portfolio.



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6 myths of alternative investing

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