Alternative Investments are the killer assets you’re conditioned to ignore.
In all areas of life, we are conditioned by two key influences: the lessons we learned while starting out, and the expert guidance and peer counsel we experience day to day.
In investment terms, this means the wisdom that was passed down to us from parents, mentors and our own efforts to acquire knowledge, at the time we began to invest, exerts a huge influence on our core behaviour.
Inherited wisdom generally advises that ‘good’ returns, with an ‘acceptable’ level of risk, are best achieved using a mix of equities, bonds & gilts, and property.
As to the guidance of professional advisers (and columnists)? And well informed friends?
Well, that tends to follow precisely the same formula.
The advisers and investment writers stick to the received wisdom on what makes a ‘sensible’ portfolio, because they want to please clients’ expectations, sell advice (or investments) and minimise the chance of getting it wrong.
In the case of well-informed friends, they tend to be more experienced, sometimes even professionally qualified, yet working off the same, time-served and venerated model of what a portfolio should look like.
In both cases, the well-intentioned guidance that comes back to us from both groups tends to be “equities, bonds & gilts and property”.
But what if we weren’t conditioned this way?What if you had a broader outlook on how best to manage your portfolio, with a greater command of the pros and cons of less ‘mainstream’ asset classes?
Conditioning and conventional wisdom are powerful influences over us all.
As investors, we tend to stick with that ‘sensible’ mix of asset classes that balances some measure of opportunity for growth, with sufficient conservatism to protect us from unacceptable risk, and trust that time will work its magic for us.
But times have changed.
For risk averse investors, those who are not looking to grow their wealth, sticking to the old way, may well be the right thing to do.
But if you have an appetite for returns that mainstream asset classes are unlikely to deliver, and an assertive attitude to risk; or you’ve simply reached a point where your portfolio is robust enough to permit you to be more adventurous, then consider alternatives within the investment space.