Are you a tech sector fan who could use a few diversification alternatives? Many savvy investors keep a significant portion of their portfolios in technology stocks. There are many logical reasons for doing so, including that technology will only become a more integral part of life with each passing year. Additionally, the sector offers virtually unlimited potential because its growth is typically based on ideas, representing the unlimited resource of intellectual property.
In recent years, some of the fastest-growing companies have been tech-driven organizations across multiple industries. But what do investors and traders do when the IT sector loses a full quarter of its value in a four-month slide, as has recently happened? Most consider reweighting their portfolios but not ditching IT shares altogether. Fortunately, there are several excellent alternatives for creative folks who want to bring both balance and the chance for solid returns to their investments.
Rental Real Estate Shares
Real estate is perhaps the ideal choice for rounding out any top-heavy portfolio with IT or other kinds of stocks. The main advantage of the sector is that it’s an income-producing asset that often does not take the economic hits that standard traditional securities do during a downturn. While real estate and corporate shares have long track records of delivering impressive returns, real estate as an investment class has not always been easy to acquire. In the past, people interested in real estate needed large capital reserves. In addition, they had to navigate the potential perils of hands-on property management. In other words, they had to be financially already well off and conversant in the language of property management.
The big change in that discouraging scenario is that prospective investors no longer have to deal with day-to-day management issues or have fat bank accounts. These days, with the advent of rental real estate shares as an option, it’s possible to break into the sector with as little as $100, an unheard-of feat in the recent past. This aspect is especially relevant for those with more long-term time horizons because the sector routinely outperforms corporate stocks in terms of financial returns. Anyone interested in finding out more about how to include real estate rental property shares should review a comprehensive, plain-language guide on the subject and consider balancing their portfolios for maximum returns.
Unless you’re an expert in evaluating wine investments, it’s essential to use a licensed pro to make picks for you. However, this niche of the alt investments marketplace has been soaring in popularity since 2010, when crowdsourced buying became widely available to everyday purchasers. One of the main benefits of putting at least a portion of your portfolio into fine wine is that returns tend to be more moderate and steadier than the typical up-and-down payouts for holders of corporate shares. Low initial minimums attract people from all income levels. Platforms regularly offer financial leverage, expert advice, and specialized algorithms for efficient investing.
Most funds come with management fees in the neighborhood of 3-5 percent. If you prefer to sell your vino before a standard 3-year holding period, most platforms will hit you with a two-percent fee, on average. Although it can take several years before people have the chance to earn worthwhile returns on fine wine investing, the tasty liquid asset is one of the most popular alternatives available today.
The international fine art market has traditionally been limited to the wealthy. That was before crowdsourcing platforms began allowing fractional participation in ownership of classics painted by the likes of Picasso and Rembrandt. For modern-day investors, the chance to own a piece of history and a potentially high return work of art is an attractive option. It’s even more alluring when you stop to consider that the contemporary segment of the niche has returned about 14 percent from 1995 onward.
Of course, that figure represents historical performance and is no guarantee of the future. However, artworks come with distinct advantages to corporate stocks, meaning acceptable art assets are uncorrelated to securities markets. So, whether the exchange indices rise or fall is of no interest to investors in the art market. On the downside, liquidity can be a challenge for owners of unique assets like classic or contemporary paintings. Standard hold times are between four and 12 years. However, experts carefully vet collections on fractional buying platforms in the field to assure that only the best works make it into the listed offerings.