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19 February 2015

Examples Of Alternative Investments That Can Generate You Money

By Olivia Cross


Alternative investments are considered to be out of the typical assets like cash, bonds, and stock. On most occasions, institutional investors and individuals with high net-worth are the main investors in this kind of investment. It is because the investment often have less regulation and involve more risks than other investment. These types of investments normally have high least investment that put off casual investors. However, they may at times provide high returns. Some examples of alternative investments include real assets, commodities, hedge funds, structured funds, and private equity.

Real assets consist of investing in assets that are non-monetary. Timberland, infrastructure, and real estate are some kinds of real assets. Real estate consists of assets like buildings that have been fixed permanently. It was a highly considered investment option in the traditional days until inception of bonds. However, because most real estate investors prefer to own dwellings than financial assets, it became an option again a few years ago.

Timberland, a form of real assets is inclusive of timber and land from certain species of trees. Although, land is not typically considered as a real asset, timber on it isn't considered so, as it is not permanently affixed. Infrastructure investments is also a form of real estate that involves investing in roads, airports, ports, regulated services among others assets managed by public service.

Another kind of alternative investment is commodities; that entails future contracts as well as physical commodities. It involves venturing into goods that have an inactive exposure to costs of products. Other investment commodities exposed to commodity prices are exchange-traded finances as well as natural resource organizations. The commodities consist of goods that are harmonized in bulk amounts of energy commodities and agricultural goods. Additional future contracts entail traditional future contracts including swaps; they have economic assets that are well-defined and are also regulated individually.

Hedge funds also a type of alternative investment that is perhaps the most manifest group of this kind of investment. They are confidentially organized investment vehicle that has less regulation to create investment opportunities that are distinct from customary investment vehicles. In legal terms, hedge funds are set up to be private investment cooperation that have few investors and require a large sum of capital. Additionally, for someone who wants to invest in hedge funds, you will be required to put your cash in them for between five to six years. As a result, they are illiquid.

Structured products create special cash flows from traditional investments or by connecting returns of structured products to other market values. Structured investment and deposits are the main types of the product. Structured deposits are often savings accounts that banks and saving Sacco's offer.

On the other hand, structured investment is provided by banks and insurance organizations. When you purchase both structured deposits and investments, you tie your cash for a given period then get a lump sum when it matures. The sum of money you get is dependent on how something else performs like the stock market.

In private equity, you will most likely invest in expansion capital, seed capital, set-up capital and business restructuring. The funds invested in this category are not usually liquid, though, investors can obtain rewards for longer cash lock-ups and early investment.




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