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Private Equity
Private equity is a broad category that refers to capital investment made into private companies, or those not listed on a public exchange.
There are several subsets of private equity, including:
• Venture capital, which focuses on startup and early-stage ventures
• Growth capital, which helps more mature companies expand or restructure
• Buyouts, when a company or one of its divisions is purchased outright
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Hedge Funds
Hedge funds are investment funds that trade relatively liquid assets and employ various investing strategies with the goal of earning a high return on their investment. Hedge funds are exclusive, available only to institutional investors, such as endowments, pension funds, and mutual funds, and high-net-worth individuals.
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Tangible Assets
Tangible assets are physical investments. These can include gold, real estate, natural resources, and more. Tangible assets are highly sought after because they are able to avoid the negative effects of market fluctuations, unlike other investment types. Tangible assets are one of the best alternative investments because they are accessible to investors of all experience levels.
Getting Started If you are interested in alternative investments you should carefully consider the pros and cons. These investment types are often not as straightforward as other assets and therefore require more research before getting started. Investing legend Warren Buffet says that true risk comes from not knowing what you’ re doing and to“ Never invest in a business you cannot understand.”
“ Alternatives are a great way to protect and build your wealth.”
For many alternative investments, there are financial advisors or fund managers prepared to do the heavy lifting. Do not let the idea of a learning curve intimidate you from choosing a profitable alternative investment. Instead, research opportunities to get a better understanding of the required level of involvement.
While professionals might be able to guide you along the process, it is up to the individual investor to determine their own investment goals. Graham Barratt, Director of Currencies Direct advises that,“ As an investor, you need to know what you want to do, what you want to achieve, then contact the professionals.”
Bheki Mkhize, CEO FNB Wealth and Investments adds:“ Defining your ideal goal-set starts with you. It could mean different things for different people, but ultimately it boils down to your needs, wants and responsibilities. This will ultimately determine your goal or objective. Long term investment goals must allow those investors to ride out any short-term volatility and allow your returns to beat inflation.”
Investors may notice that some alternative investments have high upfront fees; however, it is important to understand that they can also result in
SA Real Estate Investor Magazine FEBRUARY 2021 17