Alternative investments should be an important part of a diversified portfolio for building long-term wealth for investors. For portfolio diversification, investors should consider alternative investments besides stocks or bonds. Alternative investments are investments in any asset class other stocks, bonds, or cash. Alternative investments includes private equity, hedge funds, gold, real estate, or farmland.
Listed below are the benefits of alternative investments.
- Diversification – adding alternatives investments to a diversified portfolio makes it more stable and less susceptible to market volatility.
- Less Volatility – many alternative investments are less volatile than stocks, making it better for portfolio stability.
- Better Returns – many alternative investments offer a higher rate of return than traditional investments.
- Passive Income – many alternative investments provide passive income for passive investors.