Wealth Preservation in America: Portfolios Including Alternative Investments


Wealth Preservation in America: Portfolios Including Alternative Investments

Many Americans re-examined how and why they were investing and their wealth preservation strategy after the financial crisis. Investors who had all of their wealth tied to the stock market fared worse than those who had alternative investments not tied to the stock market. This was unfortunate for investors who needed to liquidate their investments during a low-valuation period. However, there were investors, the High Net worth (HNW) investors, which fared better than the others.

After 2008, investors started seeking opportunities in alternative investments to protect their wealth from loss. Volatility in equities and commodities investments has revitalized the desire for wealth protection.

There isn’t any secret that only HNW investors know to guarantee a high return, but there are common avoidances they generally adhere to. When they invest, they look for alternative investments that don’t fluctuate during market instability and invest to preserve their wealth for the next generations that follow. What investments do they make in addition to investing in the public markets? Tangible investments; for example:

Valuable precious metals, in addition to Gold

Government entities and manufactures desire precious metals such as Titanium and Platinum because of their use in the electronics industry. The investment may be in the mining opportunity, distribution of the asset, or some other aspect of the purchasing or development and liquidation of the metal.

Real Estate

When it comes to real estate, HNW investors think bigger, globally, and look for real estate that doesn’t come on the market often. Private residences/estates, commercial property and property (both developed and undeveloped) outside of their geographic area allows for steady appreciation over time. They look at real estate for long-term investing with monthly income and liquidation opportunities, potentially years later.

Art, Coins, and Collectibles

Investors in this asset area know the value of what they own and understand that ‘limited supply’ can make them money. Owning art and collectibles the public is aware of can potentially create a larger return. 

Alternative investments may be exclusive to the threshold amount of the investment and may not be appropriate for all investors. Furthermore, investors choosing to invest in alternative investments must be educated on the risks before investing. Lastly, all investors, including HNW investors and those seeking alternative investments, should avoid the following mistakes:

  1. Investing 100% into alternative investments.
  2. Not seeking investment advice from a qualified financial advisor.
  3. Overspending and not having a spending and a savings plan within their financial plan.
  4. Failing to rebalance their portfolio.
  5. Investing only in the U.S. Markets and allocating all of their wealth to the public markets.

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Additional Disclosure: These are the opinions of the author and not necessarily those of the Registered Investment Adviser or Broker/Dealer, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.