Real Estate Investor December 2020 December/January 2021 | Page 11

TRENDING
“ Diversification is what investors need to do . Don ’ t waste a good crisis .”
What makes these investments unique is the wide range of benefits offered outside of their high profitability . The reason many investors turn to these investments is that they offer the chance to diversify . Over time , a diverse portfolio can help minimise overall risk and increase longterm returns .
Director of Currencies Direct South Africa , Graham Barratt says : “ Diversification is what investors need to do . Don ’ t waste a good crisis . If you ’ ve got the cash you ’ re sitting on start looking for alternative investment opportunities . This is the time to make that money work for you .”
The high investment minimums that often accompany alternative investments have traditionally been most popular with institutions and select investor clientele — those with extensive capital and experience in dealing with complex financial assets . But as alternative investments move within reach of the average investor , it has become increasingly important to understand the unique benefits of this investment model .
Benefits of Alternative Investing
Diversification Alternative investments are beneficial because they represent the chance to diversify . Investors can work with alternative investments to create a well balanced portfolio and , in turn , minimise their overall risk .
Active Investing Alternative investments can be more complex , but this should be viewed as a positive . By requiring more active involvement , investors have a say in what happens to their portfolios . Alternative investments are often much more tangible , giving investors the opportunity to understand how their returns are generated .
Unique Knowledge Working with alternative investments can provide investors with the opportunity to learn more about that particular subject , while also expanding their networks in a new industry .
Security Investments such as stocks are known to shift based on various market factors , but alternative investments are often shielded from the same effects . While alternative investments are not immune to risk , their low market correlation can be beneficial to investors searching for decreased volatility , especially in uncertain times such as the global Covid pandemic .
Tax Benefits There are a number of tax benefits that accompany alternative investment types . The specific perks will vary with every investment , but many alternative investments benefit from lower capital gains taxes .
Change the Way You Invest
“ There are better ways for people to invest . The middle-class invests in houses and apartments . The top one percent invest in better assets and if you want to build wealth you need to invest where the wealthy are investing ,” says Founder of Wealth Migrate , Scott Picken .
With all the benefits listed for alternative investing , why is the average investor not looking into these more secure investment models ? Co-founder of Opportunity Private Capital , Nick Morgan says : “ I think the public at large are circumspect , maybe somewhat reserved , when it comes to alternative investing . They are more comfortable with the narrative of mainstream investments , despite their outcome .”
He adds : “ Many investors we speak to don ’ t seem to be too concerned or ask questions around the security of their investments . They invest in the stock market , lose money and go back again . I don ’ t understand that . What we have is this secure asset-backed model which is completely reliant on protecting investor capital . But people are just stuck within their traditional mindsets and would happily lose money in a medium which they think they understand , instead of trying something new .”
Morgan concludes : “ Contrary to what some commentators predict , we feel that investors may start gravitating towards the relative safety of fixed assets . The Corona virus has illustrated that the economy and related market investments are arguably fragile in times of crisis . Real estate offers a tangibility that investors will be drawn to .”
“ If you want to build wealth you need to invest where the wealthy are investing .”
SA Real Estate Investor Magazine DECEMBER / JANUARY 2021 9