WHAT ARE ALTERNATIVE INVESTMENTS?
An alternative investment is a class of investment that is not covered under any Government regulation like RBI, SEBI, IRDA and PFRDA. Refers to a private investment fund: a trust or company.
Here are some alternative investment perspectives that may influence your investment decisions:
#1 COUNT IN ABSOLUTE RETURNS
You invest to get more money than you started with. It means you’re looking for absolute return: the main focus is how much you actually earned.
Invest in assets that you believe will do well; don’t invest in a product because it is likely to outperform the market. Get your analysis.
#2 RETURNS ARE ONE DIMENSIONAL, RISK IS MULTIDIMENSIONAL
When it comes to investments, returns are easy to calculate. Stay focused on risky alternative investment assets as well. Prepare a list of relevant risks. You need to be clear about the risks involved in your investment, as it will help you make a calculated decision.
Also, if something unexpected happens, you will be able to make better decisions if you have thought about the risks before investing.
#3 RECOGNIZE THE SOURCE
Understand what will affect your investment returns. While maintaining your investment, monitor the value of your investment.
Constantly review your assumptions about the drivers of return on investment, if they do not match your parameters or expectations, reconsider your investment.
#4 WEDDING IS GOOD
What is not traditional is alternative. An alternative investment consists of investment ideas that are not immediately obvious. For example, cryptocurrency.
Constantly learning, exploring, researching, learning and looking outside your comfort zone is the key to financial success.
#5 DIVERSIFICATION IS A MUST
Holding a mix of assets that are equally good but behave differently will keep your portfolio’s return intact while also reducing risk.
Diversification means building a portfolio with a wide variety of return drivers and risk parameters, not just different assets.
Most of us see investing in alternative investments as very risky. However, if you want to live a successful and fulfilling life and retire with enough money to enjoy your retirement years, you need to take calculated risks. This includes risks in your relationships, risks in your career, and risks in your investments.
While taking smart, calculated risks is essential to achieving your life goals, remember that taking bad risks and losing them can backfire, sometimes dramatically. However, it may help to remember that taking smart risks is just as easy as making wise decisions.
A framework for making good decisions
I have learned a lot in my life by observing others and through my personal experiences, both good and bad. So when I consider taking a risk in any area of my life, here are the questions I ask myself:
1. What are the risks? be honest Don’t let your emotions prevent you from carefully considering all possible dangers. There are pains.
2. What is the probability of a risk becoming true? Be truthful. Use real data whenever possible by doing research and talking to others.
3. What are the prizes? Be realistic. Can you really quit your day job and dedicate ten hours a week to something and make $100,000 a year? (Probably not.)
4. What are the possibilities of these prizes? Be reasonable. Find out how many others have done something similar.
5. What other options do I have? Be creative. Don’t limit yourself. Consider all options.
6. Do I have to make this decision today? Probably not. Take the time you need to do your research and consider your options.
After you finish answering these six questions, remove your emotions from your decision and ask what your gut is telling you. Also, never forget the danger of the wild card; you don’t know what you don’t know!