What are alternative investments?

Alternative investments are assets you purchase for investment purposes that do not fall into the most common investment categories you think of, like stocks or bonds.

There are many different types of alternative investments, some you may never think of, but overall they are tend to be held long term and are attractive in that they tend not to be correlated to world or domestic financial markts.

Some alternative investment types are:

  • Real Estate Investment Trusts or REITs
  • MLPs – Master limited partnerships usually in oil and gas.
  • Insurance Linked Securities – like life settlement investments
  • Timber Land
  • Art
  • Wine
  • Beanie Babies?

The main draw for institutional and accredited investors is the low correlation to financial markets. That means the returns investors expect on their alternatives are not very dependent on things like GDP, company earnings and market sentiment.