Growing your fortune: alternative investments

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In a difficult economic climate, more and more people are searching for ways to be smart with their money and exploring alternative investment opportunities as a way to avoid the volatile stock market.

Spreading your money into a combination of investments can help minimise any negative impact of an economic crisis, and even if you aren’t an expert in money matters you can begin to discover different ways to manage your finances.  Choosing a combination of stocks and bonds is a fairly traditional approach, and today more people are also diversifying their portfolios with everything from hedge funds to fine art and wine.

Doing what’s right for you

The way you manage your money is very personal, and there’s no one single way to do it successfully. If you’re thinking of making a new investment, always speak to a financial advisor about the safest and most efficient way to go about doing it.

For most people, investments into things like wine, spirits or fine art are born from a hobby or passion – without realising it, one of your favourite interests may also be an interesting investment opportunity.  Unlike stocks and bonds, when you invest in collectables they are typically less liquid – which means they can’t be converted into cash as quickly as easily, so consider carefully before you make this type of investment. Guides like this one on alternative investment options from Which? can help answer some of your questions while you’re researching your options.

Considering an alternative investment

Investing in collectables and other alternative options provides a lot of choice. Some of the most popular investments include:

  • Property – Investing in property is one of the most popular ideas for new investors who want to branch out, and might be a good choice for you if you’re looking to invest your money for more than 10 years. You have two options when investing in property; investing for an income stream – by renting the property out – or capital growth, when you eventually sell your property for more than you purchased it for at a later date.
  • Wine – Wine and spirits like Whisky and Scotch are great medium-term investments that you can do with relatively low risk, and over the past decade fine wine has appreciated upwards of 10% a year. Still, investing in wine or spirits isn’t simply as easy as buying a bottle and saving it in your kitchen cupboard for a few years – if you’re interested in this type of investment, expert merchants like Berry Bros & Rudd can help point you in the right direction and answer your questions with their investment FAQs.
  • Classic cars – Investing in a classic car is one of the most time-consuming investments on the list, so first and foremost it should be a labour of love. Successfully investing in classics requires expertise, storage space and enthusiasm – you might need to restore or source and replace parts over time. That said, private sales of classic cars can go for a very high price. If you’re interested in getting involved start by joining an owners’ club and seek advice and information about private sales and what an investment of this type would involve from people who have already tried it themselves.
  • Fine art – Investing in a piece of art is a popular choice because it can be enjoyed along the way. Price fluctuations in the art market typically don’t reflect those in the stock market, and in fact, the value of art has been steadily rising as it becomes more accessible.  At the end of the day though, art should always be an emotional investment – buy a piece that you love and you’re happy to look at. Purchasing pieces from established artists is a safe choice when considering return on investment, but also pricier to purchase up front. In contrast, if you take a bigger risk on an undiscovered or up-and-coming artist you could pay less in the early stages but reap the rewards later on – if the artist becomes a recognised talent, of course.  Auction houses like Sotheby’s and Christie’s are a great place to look for potential fine art investments.

Disclaimer

 The contents of this article are for reference purposes only and do not constitute financial or legal advice. Independent financial or legal advice should be sought in relation to any specific matter. Articles are published by us without any knowledge or notice of the circumstances in which you or anyone else may use or rely on articles or any copy of the information, guidance or documents obtained from articles. We operate and publish articles without undertaking or accepting any duty of care or responsibility for articles or their contents, services or facilities. You undertake to rely on them entirely at your own risk, and without recourse to us. No assurance of the quality of articles is given or undertaken (whether as to accuracy, completeness, fitness for any purpose, conformance to any description or sample, or otherwise), or as to the timeliness of the publication.

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