When you think of investing, a few things usually come to mind: stocks, bonds and, at times, your mattress. But a wide universe of potential investments exists. Tons of ways to lose your money out there. The more unusual investment types are generally categorized as alternative assets.
Some of these fall into the general Wall Street sphere (the round kind), though they remain exotic for run-of-the-mill investors. Think: hedge funds, art work, rare coins, private equity, venture capital funds and/or just fancy bundles of derivatives. Other types of alternative assets might seem more like hobbies than investments. We're thinking of things like collecting rare wine or ancient Chinese erotic thimbles.
The issue with alternative assets is that they often require some specialized knowledge, a minimum amount of wealth and income, and a minimum standard of demonstrated financial expertise. They can be Century Investments (the kind that can go down 100% so the thought is that the less sophisticated investors who can't afford to lose everything should be made aware or protected from this peril.) Also, the markets tend to be far less liquid, meaning that it often takes a long time to get back your cash after you've bought all those sexy thimbles.
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Finance: What is an Alternative Investme...2 Views
Finance a la shmoop...What is an alternative investment hmm well maybe we
should start with the opposite to define the term here sort of like with the fine [Good Housekeeping catalog]
people at Good Housekeeping do a primary or base or fundamental investment is
something easily tangible, understandable and definable like a collection of
stocks.. Primary also includes a collection of bonds simple like what
could be more primary than a t-bill or cash yeah cash that'd be primary lumpy [T-rex walking in a jungle]
mattresses well they're hard not to love so alternative is kind of the opposite
of these things mainly stuff like esoteric hedge funds, complex ownership
structures of real estate, or REITS - real estate investment trusts, commodity
ownership oh and fancy derivatives why is there a separate category for [Examples of alternative investments]
alternative investments well because when they go wrong they go oh so wrong...
and the people who own them mostly rich people and university endowments and
union pension funds those people have to sign what's called big boy and big girl [Person signs a big boy letter]
letters so that if they wake up one day in the home they thought was blessed by
the good housekeeping people is being repossessed well then the place they go [Woman opens door and reads notice of repossession]
to complain to the people responsible for making that stupid set of
investments is a mirror yeah it was clearly cracked and more than seven years
of bad luck coming... [Girl smashes mirror]
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