Great question. The primary difference is that alternative investments are not pinned to the public market volatility. This may help lower your portfolio’s volatility, enhance your returns and thereby broaden diversification.
Alternative investments are useful investment strategies for investors looking to diversify their portfolios from traditional funds.
Alternatives have a low level of correlation with traditional investments and are less exposed to the stock market which means they can mitigate volatility and be used as a way to reduce overall risk of your investment portfolio.
Like any investment, the rate of return for alternatives is not guaranteed, but there is potential for higher yields than that of traditional investments—especially during periods of low interest rates.
Because alternative investments are so diverse, you have plenty of opportunities, which are not accessible with traditional investments. Besides stocks and bonds, you can invest in real estate, your favourite NFL star, fine art or start-up business ideas.
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