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Explore and Compare Alternative Investment Opportunities

Looking for alternative investment opportunities? Search, compare, and create a diverse investment portfolio with SpotDif.

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What's In This Guide

Discover alternative investment opportunities

In the ever-evolving world of finance, traditional investment avenues like stocks, bonds, and mutual funds are often the go-to choices for many. However, with increasing market volatility and a desire for portfolio diversification, investors are now turning their attention to alternative investment opportunities. 


These non-traditional assets can offer unique benefits, including the potential for high returns, reduced risk through diversification, and a hedge against market fluctuations. If you’re keen to explore alternative investment opportunities, SpotDif can help. Whether you’re looking to crowdfund, buy and sell property, or put money into cryptocurrency, we’ll search and compare investment opportunities across the UK so you can make an informed decision.


And if you want to discover more about alternative investments, read on for our handy guide.

What are alternative investments?

Firstly, let’s look at exactly what the term ‘alternative investments’ covers. Ultimately, alternative investments encompass a broad range of assets that don't fall into the conventional categories of stocks, bonds, or cash. These can include tangible assets like property and art, as well as financial assets like private equity, hedge funds, and derivatives contracts.


Property

Investing in UK property is a popular choice outside traditional stocks and bonds. Why? Properties often increase in value and earn steady rental income. The demand for housing in the UK usually exceeds supply, meaning there's often a good chance for profit. 


You can invest in different ways, including: 

  • Buying to rent out

  • Buying to renovate and sell on

  • Purchasing commercial property

  • Joining others to invest together through property crowdfunding. 


But remember, as with any alternative investment, property does involve risks. Property prices can go down and sometimes selling property quickly can be tough. It's smart to do your homework or chat with a financial advisor before diving in.


Private equity

Private equity is a form of investment that involves capital not listed on a public exchange, where investors take a more hands-on approach. This could involve injecting capital into private startups or buying out public firms. The aim? To strategically streamline operations, bolster management, or expand business reach for higher returns upon exit. This exit could be through an initial public offering (IPO) or sale. 


However, private equity demands substantial initial investments and entails a longer investment horizon with illiquid assets. It's a game for the patient investor who's comfortable tying up significant funds for extended periods, and it requires a deep understanding of business valuation and operations.


Hedge funds

Hedge funds are pooled investment funds that employ diverse strategies to earn active returns for their investors. They may invest in a broad array of assets, like stocks, bonds, commodities, or real estate, and they often use complex trading techniques and leverage. Their goal is to generate high returns regardless of whether markets are rising or falling, providing diversification and risk-adjusted returns. 


However, hedge funds are usually accessible only to accredited or institutional investors due to their high minimum investment requirements, fee structures, and risk levels. Their strategies can be complicated, involving derivatives and leverage, which can increase both potential gains and risks.


Crowdfunding

Crowdfunding is an innovative way to fund a diverse array of projects, from creative endeavours to entrepreneurial ventures. It involves raising small amounts of money from a large number of people, typically via crowdfunding platforms. 


This alternative investment offers a spectrum of opportunities, from equity crowdfunding where you receive a stake in the business, to debt crowdfunding where you lend money in return for interest payments and the return of capital. However, it's not all smooth sailing. Investing in startups is risky; not only are you betting on an unproven business, but these investments are often illiquid, with the potential for total loss.


Commodities

Commodities trading involves investing in raw physical goods such as gold, oil, and agricultural products. These tangible assets can be a hedge against inflation and provide diversification beyond traditional securities. Prices are driven by supply and demand dynamics and can be influenced by global economic and political developments, making them potentially volatile and unpredictable. 


For direct exposure, you can buy the physical commodity, or indirectly through futures contracts, which allows you to agree on a set price for buying or selling at a future date. However, the commodities market can be complex, and many factors can affect commodity prices, including unforeseen events like natural disasters.


Collectables and art

Investing in collectables and art means purchasing physical items with the expectation they'll increase in value over time. This can range from paintings and sculptures to vintage cars and rare coins.

 

These assets don't only offer financial returns but also aesthetic and historical value. However, investing in them requires a substantial amount of expertise, as their value is extremely subjective and can fluctuate based on trends, the condition of the item, and market demand. They're also less liquid than traditional investments, meaning they can be harder to sell quickly. Proper insurance and secure storage are additional factors to consider.


Cryptocurrency

Cryptocurrencies, like Bitcoin and Ethereum, are digital currencies that use blockchain technology to secure transactions and control the creation of new units. Their appeal includes the potential for substantial returns, transparency, lower transaction fees, and access to a universal currency. 


However, they're known for their price volatility and susceptibility to regulatory changes and technology development challenges. Investing in cryptocurrencies requires a good understanding of blockchain technology and a high risk tolerance, as the market's speculative nature can lead to significant price swings.


Venture capital

This is high-risk, high-reward investing in startups and small companies with perceived long-term growth potential. Venture capital isn’t just about funding — venture capitalists also provide strategic assistance, from managerial advice to logistical support, hoping to increase the company's value. For investors, the lure is the potential for substantial returns if the company succeeds. 


However, it's a long game, requiring patience and a willingness to lose the entire investment. These investments are also illiquid, often requiring years before any potential returns are realised through an IPO or sale.


Structured products

Structured products are fixed-term investments designed to return your initial capital plus a return that's linked to the performance of one or more underlying assets. They can be used to gain exposure to markets or assets while limiting potential losses. 


Their complexity means they're structured to suit specific risk profiles or investment strategies. However, the return depends on several factors, from the asset's performance to the product's structure. They're not for everyone, requiring an understanding of complex financial mechanisms and a thorough analysis before investments.

Always do your research before investing

Remember, while these investments might present lucrative opportunities, they come with their own set of risks and complexities. It's crucial to conduct comprehensive research and consider seeking advice from financial professionals before embarking on these investment paths.

Things to consider when venturing into alternative investments

As mentioned, investment of any kind involves some form of risk but alternative investments can be riskier than traditional ones. Therefore, it's crucial to understand and be comfortable with the risk associated with each investment type. Here are a few other aspects to take into account when looking into alternative investment opportunities.


Consider liquidity

Some alternatives, like real estate or private equity, can be illiquid, meaning they can't be easily sold or converted to cash.


Create a diverse investment portfolio

While alternatives can provide diversification benefits, it's essential not to put all your eggs in one basket. A balanced portfolio, combining traditional and alternative investments, can offer the best risk-return trade-off.


Be aware of cost implications

Alternative investments can sometimes come with higher fees or costs, especially when investing through funds or trusts. It's crucial to be aware of these and factor them into your investment decisions.

Find the best alternative investment opportunities with SpotDif

While alternative investments might not replace conventional assets, they certainly complement them, providing investors with a broader palette of opportunities. If you’re looking to create a diverse portfolio of investments, alternative income streams can be extremely lucrative, provided you take all the risks into account.

 

With so many different types of alternative investments available, it can be difficult to know where to start. That’s where SpotDif comes in. Our helpful tool can search for alternative investment opportunities and offer a comprehensive comparison so you can make an informed decision and the best choice for your financial situation. 

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Tansy Dando
Senior Content Manager
I'm always curious to understand and unpick the latest trends for all things wealth and business.
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