Tuesday, February 7, 2017

Why Alternative Investing Is So Hot Right Now

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2016 was a big year. We saw a polarization in politics like never before in the West with events like Brexit and the US election, and investors all over the planet are wondering whether this is a sign of things to come. Businesses too are reporting that thanks to the changing political climate, they’re altering their behavior and planning how they are going to navigate a challenging political landscape.

The good news for individuals is that global growth remains strong. According to estimates, global growth will expand this year from 3.1 percent to 3.5 percent, mainly because of the new pro-growth strategies outlined by the incoming US administration.

With things changing so fast, what does should the small investor be doing? Here’s some advice to weather the storm.

Start Peer-to-Peer Lending

Peer-to-peer lending wasn’t even something that was possible until a few years ago, and we go the cloud. But the very fact that it exists is worrying. In a normal economy, it’s the job of banks to take the money of savers and lend it out to borrowers. But the fact that people feel the need to go to peer-to-peer services to get a return on their money shows that the traditional market just isn’t clearing. More people want to borrow than the banks will allow, prompting savers to enter the market and lend directly.

Granted, it’s all very strange, but there are some significant returns to be had. According to Bankrate, annual returns are between 5.3 and 8.6 percent, more than triple what most savings accounts currently offer. Riskier loans based on lower borrower credit scores offer even higher rates of return than that, although the risk is considerably greater.

Art And Rarities

Investors have been piling into art recently in search of better returns. Art and rarities are seen as a sort of safe haven when the stock market is in turmoil because they tend to keep their value over the long term. Recently interest in art has been pushed, however, by increasing sticker prices of top works of art.

Michael Saigh, a managing partner at a rarities investing company, says that for many small investors, opportunities are limited because of high entry prices. Some start at more than $1 million. But with the growth of art shares, it’s becoming easier for individual investors to get a stake in the market.

The growth of cloud platforms, as discussed on the Investor Services about us page, are giving investors the opportunity to make sure that their investments meet IRS requirements. This is important whenever individuals are investing in things like art and rarities using their 401(k) funds.

Impact Investments

Finally, there has also been a surge in the number of investors doing things that they hope will save the world. With people like Mark Zuckerberg and Bill Gates making high-profile announcements about their charitable investments, many others are following suit.

The cool thing about many of these investments is that they still generate positive returns, even though their primary goal is to achieve social good.

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