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In the past few years, alternative investments have been making the headlines and sparking curiosity among new and seasoned investors alike. Most investors have a general understanding of what alternative investments are – typically, investment avenues unrelated to the traditional stock market and asset classes that go beyond stocks, bonds, mutual funds, and other conventional investments. Some of the most prominent alternative investments include private equity, real estate, hedge funds, venture capital, infrastructure, equipment financing, art, music, and collectibles, among other assets. However, it can get overwhelming to choose between the various options, let alone figure out how to balance your portfolio. Hedonova simplifies the process of balancing your alternative investment portfolio.
Understand your investment goals and risk tolerance.
Most of the investment advice you’ve heard is likely to start with the importance of understanding your own investment goals. For that, you also have to consider your age, financial capacity, risk tolerance, and investment horizon. For instance, this would include evaluating whether you’re aiming for short-term or long-term returns, your age, and capacity to invest a minimum amount plus your appetite to take on asset/ market risk. Shed the notion of a one-size-fits-all approach as your investment goals will differ from the next person based on these variable factors.
Consider a balance of traditional and alternative investments.
A universal golden rule of investing advises investors to never put all their eggs in one basket. To balance out unforeseeable risks, it is wise to spread your investments and consider a feasible ratio of both alternative and traditional investments. Clubbing the two avenues can help you unlock dual advantages. For instance, while alternative investments can provide a considerable hedge against inflation during periods of market volatility and generate high returns, traditional asset classes can be beneficial for investors looking for more liquidity over their investments and a probability of consistent returns in the long term.
Consider the fees attached to the management of every alternative investment class
It is natural to want your investment portfolio to be as diverse as possible in the interest of risk mitigation. However, it negates the whole purpose of investing (multiplying and maximizing your ROI) if you end up over-diversifying your portfolio. Alternate (and even traditional) investments come with a professional management fee, which can sometimes be exorbitant or quickly add up if you’re not cautious. In this regard, Hedonova has an investor-first philosophy – and charges 60% below the average that alternative investment companies usually charge. Moreover, Hedonova makes alternative investment more accessible for retail investors by bringing the minimum investment amount to 5000 $ – making it more equitable for independent investors and opening up a room majorly reserved for institutional/ angel investors.
Ensure regular management of your investment portfolio.
Consistency is the key to success (of any sort). To ensure your investments are performing well and creating the financial wealth you aim for, it is crucial to monitor your investment portfolio and revisit your investment objectives from time to time. It is advisable to consult an alternative investment company or professional who will help you navigate the complexities of the alternative investment landscape. Alternate investment company Hedonova goes the extra mile and not only monitors and balances your portfolio but strategically aligns your assets with your investment goals. It also considers factors like asset liquidity, market risk, and credit risk – and stays updated on regulatory changes and economic conditions, making your work easier.
Ultimately, there is no magic universal formula for balancing your portfolio. However, there is a general framework that can keep you on a balanced path – safe from under and over-diversification. The soundest approach would be to tailor your investments against your own set of variables.
This article is authored by Alexander Cavendish, Chief Executive Officer, Hedonova
For more information on Hedonova, visit: https://hedonova.io/
