An alternate investment is different from the traditional way of investing. They differ from other investments on the basis of liquidity and complexity. It includes investing in stamps, buying expensive wine, gold, rare collections, painting, etc.
Alternate investment has a feature of being less transparent and goes through lower regulations. They are close-ended funds, which means the investments in these funds are around 10-15 years. Once this investment is returned, you can choose to invest in any other option.
Advantages of investing in alternate investment
The alternate investment adds diversification, which means you have many options to invest in instead of one, this lowers the risk of loss for investors. The rate of return is higher than the traditional investing option. So, instead of putting all your money into stocks, put some money in bonds, some in buying gold, art or rare collections.
Gold investments – the most preferred investment
Investing in gold is one of the most preferred alternative investments; they come with long term security and investing in gold is considered to be the safest of all. Here we will learn everything we need to understand about investing in gold.
Why put your money in gold?
This investment comes with three features: safety, liquidity, and good returns and benefits. It’s an inflation-beating venture, which means even if the price value of gold falls in the market, it will rise again. Gold therefore, has an inverse relationship with the equity investment.
How can you invest?
One can invest by buying gold in substantial forms like ornaments, coins, bricks or artefacts.
Apart from these, there is a new trending option called gold exchange-traded fund, (EFT). These are similar to buying a material form of gold but without any hassle of storing it, which means that you are just buying proportionate value of gold. It comes with another benefit of no burglary, as it is stored in document form. It is wise to remember that if there is any price fluctuation in the market, the price of gold also gets affected.
Another option is investing in a gold fund, which means you can invest in a gold mining company. There is no effect in price if there is any fluctuation but there is a minimum charge for managing gold funds.
Do you know gold funds?
When you go for gold funds you are investing in companies who engage in gold-related activities. They use trading analysts to manage the selling and buying of stocks to make the most of the returns for the investors.
What are gold mutual funds?
These mutual funds work on providing various options to invest in gold instead of investing in one like buying jewellery. This helps in eliminating the risk of investing. You have to weigh down your needs and choose your option wisely when it comes to mutual funds.
Advantages of investing in gold
- There is a strong global demand for investing in gold.
- Investing in gold has shown a positive relationship with inflation. Even with the economic downfall, the price of gold still rises sooner or later. That’s why people prefer investing in gold since it’s a safe bet.
- They come with diversified options to invest in which optimises risk
- It’s an easy and convenient way of investing; with the nature of diversification, this investment reduces risk by a great deal. To start with, you can invest a small amount for saving regularly.
They are highly liquid
You can invest and redeem your fund anytime you want. There is no penalty if you take investment out before the period.
Disadvantages of investing in gold
- It appears to have no yield
- If you invest in buying jewellery, you have to pay for the making charges. Also, the designs cost extra. But when it is sold back, these charges are not included.
- It has no fixed monthly income as compared to other investment options such as stock.
- Not many know gold gets affected by the intern national market; any major fluctuation can affect the Indian market.
So, now we know that gold brings glittering returns if you invest in it. This alternate investment is safer and comes with liquidity which means it’s helpful in times of need. You might not be able to earn any profit out of it, but it will not hurt you financially as compared to another investment opportunity.