Asset Classes: Even More
We talked about Stocks, Cash Equivalents, Fixed Income and Commodities in the last article. Let’s talk about some more assets you can put your money in to preserve and multiply it.
Real Estate: This is a way to invest in one of the few assets on Earth that is not infinitely available: land. Real estate generally tends to hold value and prices have risen for most of history (primarily due to more money in circulation, but with a rising population, there is obviously more demand as time goes on). Albeit for illogical bubbles, real estate is considered a very good investment, since there can only be so many houses on so much land. Multi-storey apartments or flats are obviously a thing, but those don’t appreciate in value as much over time, simply because they can be made in infinite numbers.
Cryptocurrencies: These may be the most controversial form of investment/ speculation right now, purely because this industry is fairly new to the world. Moreover, there is a great scope for scams/frauds still. There is a new problem every few months, maybe due to greed, maybe due to fraud. But the main problem is that most of us don’t understand how the tech works, so we can’t make decisions using complete information. But, owing to the utility of blockchain technology, if you can identify some good projects early, you can multiply your money very quickly.
Hedge Funds: Hedge funds basically take funds from investors and aim to profit from that capital. They earn through profit-sharing agreements. The most common form is the 2 and 20 model, where 2% is the management fees regardless of PnL while 20% is the percentage of profits the fund would receive. While this is typically for HNIs, UHNIs and institutions, there could be some avenues being started for retail investors, how trustworthy they are is something you would have to judge for yourself.
Private Investments: You as a retail investor could take part in startups as an investor. This form of investment has a low win rate but a very high return on successful bets. I talked more about this here.
Businesses: While this is not a typical investment vehicle you’d find listed anywhere, owning your own business (or businesses) is a very potent asset to have. And while these won’t be passive investments like all the others we’ve talked about, the income from this asset could have exponential linear growth if it’s set up correctly. And businesses don’t have to be tech startups only, simple boring businesses like restaurants, car washes, laundry services, etc. work well too.
Do you know of more alternative asset classes that I haven’t talked about? Leave a comment if you do! Meanwhile, try to build your portfolio with a little bit of everything from the list. Diversify, so that a single unexpected event doesn’t destroy your investment returns. And while that’s it for this article, you can read all my articles here. And do let me know if you want a specific topic covered! Subscribe for free to receive new posts and support my work.