Activate Your Money

CHAPTER 10Alternative Investments: Achieve Deeper Diversification and Impact

Alternatives encompass all the investments that do not fit in the conventional asset classes of cash, fixed income, and public equities. Even private investments, which we covered in the last chapter, are usually considered to be alternatives. Currency, gold, real estate, natural resources, art—virtually anything you can buy and sell—can be an alternative.

People invest in these assets for a variety of reasons. They may be pursuing portfolio diversification, a hedge against inflation, opportunities to grow wealth, or a personal interest. Here's a breakdown of each:

• Portfolio diversification is a commonly cited reason for investing in alternatives because these assets are not usually correlated with stock and bond markets. Happily, there are a number of values-aligned alternatives you can invest in to achieve this goal.
• Tangible assets such as gold, art, or real estate are often used as a hedge against inflation or economic setbacks. Investments in foreign, or even crypto, currencies can serve a similar function. My husband owns both gold and cryptocurrency, while I hold neither.
• Many people view real estate as a means of generating wealth, particularly in markets that have historically experienced rising property values over the long term. I was weaned on real estate and count on it as part of my income during retirement.
• Sometimes, we have specialized knowledge we want to capitalize on and invest ...