Investments that don’t fall into one of the traditional categories like stocks, bonds, or cash are considered “alternative”.
Alternative investments encompass a variety of assets but share many similarities. They tend to be illiquid, unregulated, and risky, but also yield high returns and counterweigh traditional investments
Examples include private equity (angel investments), hedge funds, commodities, and cryptocurrency, as well as tangible assets like art, wine, coins, and precious metals.
Investors make alternative investments for one reason—diversification.
Because alternative investments have a low correlation with standard asset classes like stocks, they are an excellent counterweight. This means that while stocks and bonds are hurting, alternative assets may be doing just fine.
As investors, we never want to have all our eggs in one basket.
Also, things like gold, antiques, and oil provide a hedge against...