Ways to Invest: Traditional vs Alternative

If you are financially minded, you have probably heard a lot over the years about investment. There has been lots of news coverage about the Investments Banks and other organisations that have got you interested in the concept. The principal is simple: You can entrust some of your money into a business or product in the hopes that you will see a share of the profits down the line. There are risks involved, but the rewards can be substantial.

There are the traditional ways of investing that you may be familiar with, and also, some alternative methods to consider. In this article, both will be examined so you can see which option is right for you.

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Ownership Investment

When buying into an ownership investments, you then own the asset—something that is predicted to rise in value. These investments can include stocks. Stocks are also called equity or shares. Stocks give you stakes in a company and also its profits. Essentially, you become part owner of a public company. Large ratios of your portfolio could well be comprised of stocks.

Real Estate

Real estate is another very popular form of investment. Any real estate properties you purchase and then lease out or sell are ownership investments. If you do your research into the marketplace, you could end up making a tidy profit when you come to cash in, though this is not always guaranteed.

One mistake that some investors make is putting all their eggs in one basket. If there is ever a problem with your brokerage firm, then you could face some worrying times, and possibly even lose your capital. You may consider spreading your investments over more than one brokerage firm, to lessen the effect if the worst should happen. You can find more information on diversifying your brokerage accounts if you click here.

Along with the ubiquitous stocks and shares route is another, more interesting scenario. This is known as alternative investment.

Alternative Investment Opportunities can vary wildly in what they involve. Some of the most common are in things like precious metals and commodities.

Precious Metals

Metals and collectables are, technically, ownership investments. You own the resource that you are buying, for example. But as it is not a stock or bond, it is mostly referred to as an alternative. Let’s look at the most obvious of them all: gold. Gold is noted for its durability (it does not rust or otherwise corrode). It is also known for its malleability and the ability to conduct heat and electricity. It is commonly used for industrial applications in dentistry and electronics. We are most familiar with gold as a base for jewelry and certainly as a form of currency.

The value of gold is assessed by the market constantly. Gold’s price is not as affected by the laws of supply and demand. This is because newly mined gold supply is massively outweighed by the sheer wealth of consumer-ready gold. When those who hold gold feel they want to sell, the price goes down. When they are inclined to buy, any new material is quickly acquired, and the prices are raised again.

Venture Capital

This is money provided to a small business or startup to get up and running, with the hope that it expands. If the expansion occurs, it should lead to you getting a return on your money. It is quite common for venture capitalists to become partners in that company. The can then claim a degree of its equity and have a say in business decisions. When looked at in this manner, they can also be considered to be ownership investments.

Commodities

Commodity investment is investing in a type of resource which has an effect on the economy. Beef, oil and gas are all distinct kinds of commodities. The contracts used to buy such goods are called Futures Contracts, and you must ratify them via a National Futures Association broker. According to http://www.tradecommodities.co.uk the ten most popular commodities to trade are as follows:

  1. Crude Oil
  2. Coffee
  3. Natural Gas
  4. Gold
  5. Brent Oil
  6. Silver
  7. Sugar
  8. Corn
  9. Wheat
  10. Cotton

As you can see, there are many different kinds of investment available, and this is just the tip of the iceberg. Ensure that you shop around for advice and do a wealth of research on this topic before making any decisions. Hopefully, if you invest wisely, there will be a nice profit in it for you.