Alternative investments are financial assets that do not fall into one of the conventional investment categories such as stocks, bonds or mutual funds. Experts agree that alternative investments are best used to diversify financial portfolios. It’s best to allocate your money between stocks, bonds and alternative investments.
Benefits of alternative investments:
- Alternative investments add diversification to a portfolio which helps mitigate volatility
- Alternative investments can increase the return on your portfolio
- Alternative investments can decrease the total risk of your portfolio
Investing in Real Estate
Traditionally, people invest in real estate by purchasing property and collecting rent or by increasing the value through renovations and reselling. This is still a good way to invest in real estate but there are alternative methods. You can invest in real estate without having to buy property.
Alternative Real Estate Investment opportunities
Real Estate Investment Trusts (REITs)
These are like mutual funds because they pool investors funds and use it to buy an underlying asset. REIT funds are used to buy and hold properties that produce income.
Mortgage Investment Corporations (MICs)
These gather money from institutional and other investors. MICs then lend it to mortgage borrowers who are unable to get financing via traditional channels.
Syndicated Mortgages
Similarly, to MICs, syndicated mortgages pool money from two or more investors, and invest it in a mortgage. The difference is that a syndicated mortgage involves one mortgage and not many mortgages.
Real Estate Exchange-Traded Fund (ETF)
This is a collection of stocks or bonds in a single fund. ETFs are like index funds or mutual funds because they come with the same broad diversification and low costs.
Are you looking for alternative ways to invest in Real Estate? check NorthLend Financials free downloadable information package to learn about your investment opportunities.