Tired Of The Wall Street Drama? Here's How To Unlock Better Returns & Lower Risk

There's no denying it.

The stock market is the greatest engine of passive wealth creation in the world.

But that doesn't mean it's a smooth ride.

If you've ever found yourself:

  • Wide-eyed as NVIDIA Corp (NASDAQ: NVDA) soars and Walgreens Boots Alliance Inc WBA comes crashing down
  • Breaking into a nervous sweat while watching CNBC report on Apple Inc. AAPL earnings
  • Or wondering if there's a less nerve-wracking way to grow your hard-earned money...

You're not alone.

It's one of the key reasons retail investors flock to investment newsletters in search of the next up-and-coming stock.

But let's face it: Investing in the stock market can sometimes feel like a roller coaster you never signed up for. The highs are thrilling, but the lows? Well, they can keep you up at night.

Luckily, there's a way to smooth out those ups and downs while potentially getting even better returns.

Introducing: Alternative investments

"Alts" include investments like private equity, real estate, commodities, art, fine wine, and more.

And J.P. Morgan Asset Management recently found that including a mix of 30% alternatives would have resulted in better risk/return outcomes when compared to portfolios with allocations of:

  • 40% stocks and 60% bonds
  • 60% stocks and 40% bonds
  • 80% stocks and 20% bonds

The takeaway is clear.

Decreasing exposure to traditional stock and bond markets, and instead allocating some funds to alts, can produce more "bang for your buck."

In essence, there are 3 reasons to buy alts:

1. Diversification

2. Risk management

3. Improved risk-adjusted returns

But of course, alternative investments aren't without their risks. After all, no investment is a magic money tree. If you consider investing in one of these alts, be cautious of the following:

  • Less regulation
  • Less liquidity
  • Less transparency
  • Higher fees and commissions
  • Limited price discovery

However, the longer your investment time horizon, the more these risks can potentially be mitigated.

For most retail investors, completely replacing traditional stocks and bonds with alts isn't the goal. Instead, consider them as an additional tool in your investment toolkit, a way to enhance and diversify your portfolio.

Many of the world's wealthiest investors and institutions have been using alternative investments to their advantage for years. It's not about abandoning the stock market, but about leveraging other opportunities to achieve a broader, more resilient portfolio.

So remember, the stock market isn't the only game in town. By integrating alternative investments into your strategy, you stand a chance at smoother sailing, diversified risks, and potentially even greater returns.

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Posted In: MarketsPersonal FinanceGeneralAlternative investmentscontributorsdiversificationExpert Ideas
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