Alternative Investments
Overview
Technically speaking, an alternative investment is any valuable asset that isn’t a stock, bond, or cash. It’s a broad term—examples include everything from fine art and vintage cars to venture capital and cryptocurrency.
However, many alternative investments tend to share a few key characteristics. For instance, they aren’t typically traded on the stock market, and they’re often less regulated and liquid than traditional investments like stocks and bonds, carrying unique risk, return, and tax considerations.
Investors often use alternative investments to diversify their portfolios and hedge against market volatility, given that alternatives typically have a low correlation with traditional assets and tend to trend in the opposite direction.
Many alternative investments are only available to accredited investors or high-net-worth individuals, and some have relatively high fees compared with traditional investments.
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