Posts Tagged ‘alternative investments’

Alternative Investments: The Secure Investment Path

Wednesday, December 28th, 2011

Alternative Investments are defined in Investopedia as any investment that is not part of the traditional asset classes of Stocks, Bonds or cash. The advantage of alternative investments is that they offer a great diversification from the traditional asset classes as they show very low correlation to them.

Until recently Alternative Investments were only available to financial institutions or High Net Worth Individuals, but with the demise in overseas property many companies that promoted property have started to offer alternative investments to the retail investor.

Some of the more popular alternative investments include: Hedge Funds, Managed Futures, Real Estate, Commodities and Derivatives. The above list still mainly caters for High Net Worth Investors but the Companies that moved into promoting Alternative Investments have introduced a number of investments specifically for the retail investor.

The most noteworthy new investment that has been offered to Retail investors is forestry. This at one time used to be an investment for Institutional investors, but it has now been opened up to the retail investment market. The best forestry investment in my opinion is Teak, which can return about 16% per year over a 17 year period. Other woods that are worth considering if this investment timeframe is too long for you is Melina which can generate 12% per year over 12 years or Eucalyptus which can earn the investor 13% per year over 8 Years.

Recently Bio Diesel has been gaining a lot of press coverage as a potential solution to the World’s dependency on Oil. One of the main types of Bio Diesel is called Jatropha and is grown in many Asian countries. It has been mixed with A1 jet fuel and there have been many successful air trials where planes have flown with this mix of fuel. The returns are quite impressive as well with returns of 20% per year being achieved after 3 years.

You could still consider investing in Oil as a hedge against future oil price rises. It is possible to buy barrels of oil at the wholesale price of $48 dollars a barrel and then have the oil company sell your barrels of oil at the prevailing spot price. The price is currently above $90 a barrel and forecasts suggest it could go higher next year. You may ask why an investor could buy oil so cheap? Many drilling companies sell their oil in the ground forward in order to reduce the level of debt the company has. They also extract your oil over a 7 year period and pay you your returns on a quarterly basis.

A more traditional alternative investment is Gold which has risen by 15.3% this year. Prices have dropped off over the last 3 months having reached over $1900 per ounce, but with the continuing economic turmoil in the world it still makes an excellent portfolio insurance. With quantitative easing in the UK, additional quantitative easing looking likely in the US and the European central bank making significant capital available to bail out European countries, the major fiat currencies are being devalued. The only store of value is Gold. Most financial commentators suggest that investors hold at least 10% of their net worth in some form of physical Gold.

One alternative to Gold worth looking at to preserve your wealth is Coloured Diamonds. The price of these very rare stones have increased by 28% this year and this price growth rate is expected to continue for the next few years. The main mines that produce these stones are starting to become less economically viable and so the levels of production in the future will tail off. This can only increase their rarity in the future and therefore the price.

A new and emerging market worth considering is Carbon Credits. This market was established by the signing of the Kyoto protocol which established a mechanism for reducing carbon emissions. The voluntary market is for companies that don’t need to curb their emissions but want to for public relations purposes. Investors can make up to 30% per year by holding Carbon Credits for 12 months. .A word of caution though, only invest with a carbon broker who has a good track record as there are a few scam artists in the market place. Even though the upside is still so good it is worth adding carbon credits to your portfolio.

Alternative investments should be considered as part of any serious investor’s portfolio. Whilst the traditional asset classes are showing very low returns with increasing levels of risk, you can put your portfolio on a sound footing by increasing your holdings of alternative assets in the current financial climate.

Interested in Alternative Investments make sure you check Mark Skeels’ excellent free report on Alternative Investments. Sign Up now for your free Alternative Investments Report.

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Alternative Investments: Superior Returns in a Mediocre World

Thursday, December 8th, 2011

Alternative Investments would be the best place in the current financial climate for investors to put their hard earned capital. Unfortunately for the average investor information about how these investments could help protect their future financial position is not very well publicised. The mainstream media spends all its time talking about the equity and bond markets, implying that there is no alternative for the average investor, to achieve good returns in the current climate.

Financial advisers still focus on advising their clients to invest in the stock market directly or through unit trusts or mutual funds even at a time of extreme volatility where positive returns have not been seen for 10 years.

All advice given to investors is that over the long run the stock market can grow at between 8% and 10% per year. This is because it did between 1980 & 2000, but if you were to take a longer perspective the average growth rate in the stock market over 300 years is closer to 2%. Is the stock market reverting to its historical average and likely to continue at 2% per year? Government bonds and bank savings rates are also around 2% a year, so there is little real return out there.

The financial press appears to have blinkers about the wider investment opportunities available to the investor and continues to write about whether unit trust A is better than unit Trust B, whilst both are losing money for the investor. The financial press appears not be interested in helping investors find positive returns for their investment portfolios.

I find it very surprising that while there are assets delivering double digit returns on an annual basis there is very little coverage in any of the traditional financial media. Frankly the financial media is doing a disservice to its customers and is purely there to help the financial service sector maintain the calm over its investors to keep their money in poorly performing products which deliver the management fees to the professional managers irrespective of the returns generated to the investor.

It should be noted at this point that Alternative Investments are unregulated and therefore considered to be more risky in the eyes of the financial regulators. My counter argument would be to look at the number of misspelling claims and traditional investments that have managed to lose money for their investors. Could unregulated investments do much worse?

Most financial products are paper based and enable the investor to liquidate their position quickly if they need to. The risk to the investor is termed market risk as the asset may have changed in value significantly between buying it and the need to sell it leading to a potential loss.

Alternative Investments are more physical in nature as an investment as in many cases the investor owns a tangible asset that will generate a future cash flow over a number of years. Examples of alternative investments include forestry, where the investor will buy a number of tress which will grow and give off a cash flow as thinning occurs and then when the trees are felled at maturity. Many financial institutions have invested in forestry and as an asset class it has delivered positive returns above inflation for over 100 years. Yields have been over 10% per year for decades.

At a time when oil prices are high, you the investor can cash in by investing in Bio Diesel. This enables you to buy up parcels of land upon which trees area planted, which generate a cash crop. This crop can produce green oil that can be used to fuel cars and energy generation and again can deliver double digit returns for up to 50 years.

You could also invest in Oil itself. There is an investment which enables you to invest in Oil and buy at wholesale prices, which are then sold in the future in the spot market. This investment will generate a cash flow every quarter for 7 years and conservatively make a 15% return on capital.

These three examples of Alternative investments are just a sample of the types of investments that are currently on offer in the market place and in my opinion would provide a much safer haven for an investor’s hard earned capital than a number of the traditional investments marketed to investors.

Interested in Alternative Investments? Make sure you check Mark Skeels’ excellent free report on Alternative Investments. Sign Up now for your free Alternative Investments Report.

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Investing in Gold: The Key to a Healthy Financial Future?

Friday, November 25th, 2011

Investing in gold has long been a popular alternative investment for those who are not happy with simply placing their money in a savings account. If this describes you and if you would like to see your hard-earned cash work harder, then have a look at what gold can do for you in this article.

First of all, remember that the value of gold varies on a day-to-day basis, so you must think of this as a long-term investment rather than a get-rich-quick scheme.

Don’t be put off by the thought of gold bullion, either; it may be bulky, but you won’t be expected to create a mini Bank of England in your garage. The reality is that it is highly unlikely that you will see your bullion because it is much too expensive to insure its transportation and delivery. Having it stored safely will account for just a per cent of its value each year, with many people who invest in this commodity opting to have it stored off-shore or by specialists that have already been through the arduous insurance process.

If you are thinking about padding out your pension, this can be done with gold, but be aware that if you choose bullion you will have to pay VAT on it at 20 per cent. This is in comparison to gold coins, which are not subject to this levy. These are all factors to take heed of as you ready yourself for investing in gold.

Gold coins are produced by a number of different countries in limited numbers, and their value is determined by retail demand from collectors. If you can find Numismatic gold coins, you will find that these have a higher value than ordinary gold coins because they are older and rarer. For example, a $5 Indian Head 1909 coin (US) has a premium of 1,715 per cent over its gold price.

Other things to remember when investing in gold are to choose coins that are popular with collectors as well as investors. This way, you can be certain that you will have a buyer when the time comes to sell. Only ever buy from reputable sellers; and because this is an investment, only buy rare coins that are certified.

Another physical gold alternative is jewellery; currently you will have noticed that there are many adverts claiming to give the best prices for gold necklaces, bracelets and other luxury items. If you are looking for an investment, this is not the way forward.

There are two reasons why jewellery sells: for the value of the gold or other precious metal, and for its aesthetic qualities. For the latter, it really has to be an outstanding piece and then it will be sold on, otherwise it will be melted down.

What needs to be taken into consideration here is what carat gold is in the piece, the weight of the metal in question and what the market value of gold is. Gold is measured in troy ounces, which means that you will need more gold per ounce than in a traditional ounce. This will impact upon what you receive for it, and of course, you must remember that the dealer you sell it to will want to make a profit, too.

When it comes to investing in gold, physical gold is most certainly worth thinking about, with jewellery also lucrative in exceptional circumstances. If you do your research, and make wise investments, the digits in your bank balance could thrive.

Make sure to check out Mark Skeels’ excellent free report onInvesting in Gold Sign up for your free Alternative Investments Report Now.

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Ways to Monetize Your Insurance Policy

Thursday, April 7th, 2011

There are a number of ways to monetize your insurance policy if you need the extra cash, such as selling it to Life Partners Corporate. Although selling or cashing out on an insurance policy isn’t for everyone, it may be advantageous for the policy holder to do so in some cases. You can make money on your existing coverage via accelerated death benefits and viatical or life settlement.

Life Settlement

Instead of cancelling your life insurance policy, it might be wiser for you to choose life settlement instead. This is especially suitable if you are not qualified to receive death benefits sooner than the original plan. A good example is a case where a terminally ill individual needs money in which he or she can go through a viatical settlement or life settlement.

Life settlements involve the sale of an insurance policy to a third-party investor. The current policy holder sells the coverage to that investor at an average of 20-30% of its value. After the sale, the new policy owner then continues making premium payments until the original policy owner passes on. In the event of the demise of the original policy holder, the new policy owner receives the overall face value of the plan as long as he or she has paid the required premiums. This kind of settlement may also be used by employers that provide life insurance coverage for their workers so the former can recoup their investments when an employee leaves the company for reasons such as new employment or retirement.

Accelerated Death Benefits

If you realize that you don’t need your insurance policy anymore, don’t cancel your insurance coverage. When you cancel, the premiums you paid wouldn’t be refunded. You will do well converting that insurance into money through accelerated death benefits plus you get to keep the money that usually pay your premium.

Read the terms and services of you insurance policy contract. You’ll be able to know if you qualify for accelerated death benefits. If you are, you can be paid around 50-80% of your policy’s face value. You’ll get to enjoy the benefits of the extra money paid to you and enjoy life with it while you still can.

You can make money off your life insurance policy in two ways. One is by obtaining life settlements and the other is by taking death benefits while you still live from Life Partners Corporate.

If you’re looking for more information on life settlement companies such as Life Partners, then please visit our site. Life Partners Holdings is located in Waco, Texas.

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Considering Alternative Investments

Tuesday, August 31st, 2010

Are we heading for inflation? What about deflation? Are you unsure? A lot of people are so it is becoming difficult to know where to put your money. In an environment like this I believe that you should consider alternative investments. No one can be sure of what is to come but we can do our best to prepare for it.

I too, like everyone else, am uncertain. If I were pushed to give an answer I think that we will see inflation after a short time of deflation. What does this mean for investing? In a period of deflation then cash becomes a good bet. We have seen that in Japan where they have been struggling with deflation for years.

So given that we might see deflation does that mean that alternative investments are unwise? Not necessarily. The reason for that is the Fed is printing money like nobody’s business. Just because this isn’t having an impact on the ‘real’ economy it doesn’t mean that it doesn’t exist. This money has to be channelled into something in search of a return. It might just find its way into alternative investments.

Although there are two camps of thought on the inflation/deflation issue, the majority of people have the belief that it will be inflation. In a scenario like this alternative investments tend to do quite well.

Values in alternative investments, such as wine and antiques, aren’t very correlated to fluctuations in the stock market. This allows you to diversify more and given that a lot of people have a lot of wealth tied up in equities this is not necessarily a bad thing.

Not being able to know what will happen can be quite unsettling. This means that you have to do your best to protect yourself if the worst does happen. Having exposure to alternative investments will help you with that.

Are you keen to find out more information on alternative investments strategies? If yes then you can discover more by going to Dave’s blog. It has all benefits and negatives of making alternative investments.

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