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 that both the wisdom that was passed down to us from parents and 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 and gilts, and property.

As for the guidance from professional advisers, columnists and well-informed friends?

That tends to follow precisely the same formula.

Advisers and investment writers want to please their clients’ expectations and minimise the chance of getting it wrong, therefore they tend to follow the same perceived wisdom on what makes a ‘sensible’ portfolio.

In the case of well-informed friends, they tend to be more experienced and can sometimes be professionally qualified, yet they still work off the same time-served and venerated model of how a portfolio should look.

In both cases, the well-intentioned that comes back to us tends to be: “equity, bonds and 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 to the ‘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 who are not looking to grow their wealth, sticking to the old way might well be the right thing to do.

If however, 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.