Alternative investments have become increasingly popular as investors seek to diversify their portfolios and potentially achieve higher returns. Among these alternative investments, four have garnered particular attention in recent years including Artificial Intelligence (AI), Cryptocurrency, Real Estate, and Commodities.

What are alternative investments?

Alternative investments are non-traditional assets that differ from the standard investments in stocks, bonds, and cash. These assets can include commodities, real estate, cryptocurrency, private equity and many more.

Alternative investments often have a low correlation with the broader market, offering potential for high returns. They can also come with higher risks and may require specialised knowledge and expertise to invest in.

Artificial Intelligence

Artificial intelligence (AI) is a relatively new technology that has the potential to transform many industries, including finance. Investing in AI can take many forms, including investing in companies that use AI technology, such as healthcare providers or financial institutions. However, AI investing can also be challenging, as it requires specialised knowledge to identify the right opportunities and risks.

Commodities

Commodities, such as gold or oil are physical assets that are traded on commodity exchanges. They are often considered to be a hedge against inflation and can provide diversification benefits to a portfolio. However, commodity prices can be volatile and depend on a wide range of factors, including geopolitical events, weather conditions and supply and demand, so it’s important to carry out due diligence in each field.

Cryptocurrency

Cryptocurrency, such as Bitcoin, has taken the world by storm. While it is a highly volatile investment, some investors believe that cryptocurrency can offer significant returns if invested wisely. However, investing in cryptocurrency can as always, be a risky endeavour, and it is not recommended for inexperienced investors.

Property

Property, on the other hand, has been a popular alternative investment for decades. Investing in property can take many forms, including buying rental properties, investing in real estate investment trusts (REITs), or participating in real estate crowdfunding. Property can offer several benefits to investors, including steady cash flows, potential for capital appreciation, and diversification benefits. Additionally, property investment has historically been less volatile than stocks and can provide a hedge against inflation.

One of the primary advantages of property investing is its ability to generate passive income through rental income. By renting out a property, investors can receive regular cash flows that can help to offset any capital costs or expenses associated with owning the property. Furthermore, property investment can also offer a significant potential for capital appreciation over the long term, particularly in areas where demand is high and supply is limited.

In the long run, while AI, cryptocurrency and commodities can offer lucrative opportunities, only real estate can offer solid diversification benefits to a portfolio that other alternatives can’t. By offering a reliable asset based on performance, investors can gain a more hands-free approach by securing property in regenerative areas to result in higher returns.