Alternative Investments EXPLAINED

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In this video I'll discuss the fundamentals of alternative investments such as hedge funds, private equity, venture capital, and others.

Video that explains what an Accredited Investor is:

https://www.youtube.com/shorts/O4j0VdysD9s

Alternative investments are investments that do not fall neatly into the conventional pre-packaged stocks, bonds, and cash categories.

Why invest in these? For two reasons. First are the significant returns that these types of investments can bring, and second, the diversification they can offer to a portfolio.

There are also a few down sides to alternative investments. For one thing, they are sometimes subject to a less clear legal structure. Some of these investments have no requirement to register with the SEC and receive little to no oversight. This, in turn, makes them more prone to scams and fraud than conventional investments. Many alternative investments are also not exactly liquid, which just means they can be difficult to quickly sell and turn back into cash, and sometimes also difficult to valuate properly as compared to stocks and bonds.

Alternative Investment #1:

A hedge fund is a collection of money pooled from accredited investors. The fund is usually privately set up by a money manager and organized as a limited partnership or an LLC. Once set up and funded, the hedge fund can invest in publicly traded assets, such as stocks, bonds, currencies, commodities, and derivatives. It can also invest in just about anything else as guided by its stated investment strategy and style.

Alternative Investment #2:

This is another major class of alternative investments and is essentially private money for purposes of investment. More specifically, private equity, or PE, is a pooled investment fund, operated by a private equity investment management company, and the fund’s investing goals are to buy and restructure distressed companies that are not publicly traded.

Alternative Investment #3:

The third major category of alternative investments, and that is venture capital, or VC. VC is somewhat similar to private equity but with a focus on cultivating startup companies, not turning around existing ones.

Alternative Investment #4:

These five items are antiques, art, collectibles, rare coins, and wine. They’re all grouped together for convenience, as all five have rather similar pros and cons. In general, are all risky and difficult alternative investments to specialize in, but can appreciate and give significant returns in some cases.

DISCLAIMER

This video was created for informational and educational purposes only, and should not be construed as a source of specific investing, financial, accounting, or legal advice. This video should never be used as the sole source of information, without consulting with a financial or legal professional to determine what may be best for your individual needs. The creator of this video, Elliot J. Gindis, does not make any guarantee or other promise as to any results that may be obtained from using the information in the video. To the maximum extent permitted by law, the creator of this video disclaims any and all liability in the event that any information, commentary, analysis, opinions, advice, and/or recommendations contained in this video prove to be inaccurate, incomplete, or unreliable, or result in any financial or other losses.

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