Traditional Investments - are vehicles such as stocks, bonds or cash.
Why do people use Alternative Investments? - are popular because they have a 'low correlation' to traditional investments. Meaning that each investment type react differently in various economic conditions. In a time of inflation stocks and bonds differently than one another and alternative investment behave differently than both vehicles. Meaning alternative investments behave uniquely to conditions such as supply and demand, growth with or without inflation and recessionary periods.
What are alternative investments?- Commodities, such as gold, managed futures, commercial or foreclosed real estate, equipment leasing, foreign currencies, oil and gas. Typically alternative investments have been available to only 'qualified investors' or high net worth individuals.
But because of the growing popularity of alternative investments and the correlation with other asset classes some mutual funds are including alternatives in their funds.
Ask your advisor if alternative investments are suitable for you. But ultimately you need to have some familiarity about these terms even when you work with a professional because it's YOUR money.
Citations:
http://www.nuwireinvestor.com/about/whatisanalternativeinvestment.aspx
Marion Syversen, MBA
NorumbegaFinancial
207.862.2952
Marion@NorumbegaFinancial.com
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Disclosure:
Only securities and advisory services offered through Wall Street Financial Group, Inc. Registered Investment Advisor. Member FINRA/SIPC. Wall Street Financial Group, Inc. and Norumbega Financial are separate entities, independently owned and operated. (CR9056)
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