From beating rising inflation, to lowering risk and delivering steady returns, alternative investments are proving that they are a great investing option.
In a 2012 study of luxury goods, found in Knight Frank's Luxury Investment Index, it was reported that over the course of ten years; as much as a whopping 174% average return was taken on several product categories. Classic cars, antique watches and other luxury goods can make for a good investment, as demand for these assets steadfast. Rare, special collector coins yielded a huge return of more than 225%, and classic cars leading the way with a 430% return over a ten year period. Returns like these are unusual, but they are there if one has the appetite for these type of alternatives.
Real estate internationally is showing great returns of late as the UK's luxury real estate market has seen growth for the past two years, with Asian and Mid-East investors scooping up commercial and residential properties throughout London and surrounding countryside. It's far from over, and can provide great investment return.
A Little More on Classic Cars: This excerpt taken from The Guardian – Shortcuts Blog.
According to Talacrest, an Ascot-based specialist that has sold some $600m-worth of classic Ferraris, vintage Ferraris are "the Picassos of the car world", increasingly seen as a rock-solid investment. The man believed to have sold this particular model, Jon Hunt, founder of Foxton's estate agency, wouldn't quibble with that: he appears to have made £4.5 million on the car in the four years he owned it.
But here's the thing: in 1963, the same car cost £6,000. As investments go, could you have done any better? If you had hung on to the car, your initial outlay would have multiplied nearly 3,400 times. So where is it safest to put your money?
Working out the returns on long-term investments is not easy. For one thing, it is necessary to choose investments that beat inflation and preserve your personal wealth. According to thisismoney.co.uk, £6,000 in 1963 is the equivalent of just over £100,000 now. But all the same, in 1963 an ounce of gold cost $35.09 (£22). In late January 2014 it was trading at $1,700 (£1,069) an ounce – an unbelievable 49-fold increase.
Then, there are the "alternatives to alternatives" which provide a lower risk, albeit lower return, but growth through conservatism is a strategy for many investors. Some of these include:
- Convertible Mutual Funds
- High Yield Bonds
- Short Equity