WHAT IS AN ALTERNATIVE INVESTMENT?
Alternative investments are a class of investments that are not covered by any government regulations such as RBI, SEBI, IRDA and PFRDA. I mean a private investment fund – a trust or a company.
Here are some alternative approaches to investing that can influence your investment decisions –
№ 1 FOCUS ON ABSOLUTE EXPENDITURES
You invest to get more money than what you started with. This means that you are looking for an absolute return: the main focus is how much you actually earned.
Invest in assets that you think will succeed; do not invest in a product just because it can outperform the market. Have your analysis on hand.
№ 2 SIMILARITY ONE-DIMENSIONAL, RISK IS SMALL-DIMENSIONAL
When it comes to investing, profits are easy to calculate. Focus on the risks associated with the alternative investment asset. Prepare a list of relevant risks. You need to have a clear idea of the risks associated with your investment, as this will help you make an informed decision.
Also, if something unexpected happens, you will most likely make better decisions if you think about the risks before you invest.
№ 3 KNOW THE SOURCE RETURN
Understand what will affect your investments and lead to their return. As long as you keep investing, keep an eye on the value of your investment.
Constantly review your assumptions about the factors of return on investment, in case they do not meet your parameters or expectations, rethink your investment.
# 4 UNCLEAR – GOOD
Anything that is not traditional is an alternative. Alternative investments are filled with investment ideas that may not be obvious right away. For example, cryptocurrency.
Continuous learning, study, research, study and search outside the comfort zone is the key to financial success.
№ 5 MANDATORY DIVERSIFICATION
Keeping a mix of assets that are equally good but behave differently will leave the profits of your portfolio intact, and reduce risk.
Diversification means creating a portfolio with a wide variety of profitability factors and risk parameters, not just with different assets.
Most of us find investing in alternative investments very risky. However, if you want to live a successful and fulfilling life and retire with enough money to enjoy your retirement years, you have to take the calculated risks. This includes the risks in your relationship, the risks in your career and the risks in your investments.
While reasonably calculated risks are very important to achieving your goals in life, remember that steady risks and losses can repel you, sometimes significantly. However, it can help to remember that taking wise risks is as simple as making wise decisions.
A framework for making good decisions
I have learned a lot in my life, watching others and through my personal experience – both good and bad. So when I think about risk in any area of my life, I ask myself:
1. What are the risks? Be honest. Don’t let your emotions think carefully about all the possible risks. There are mines here.
2. What are the chances of one of the risks? Be truthful. Use real data if you can, while researching and talking to others.
3. What are the awards? Be realistic. Can you really quit your daily job and dedicate ten hours a week to something and earn $ 100,000 a year? (Probably not.)
4. What are the chances of these awards? Be smart. Find out how many others have done something similar and how it all went for them.
5. What other options do I have? Be creative. Don’t limit yourself. Consider all possibilities.
6. Do I need to make that decision today? Probably not. Take the time to research and explore options.
Once you’re done answering these six questions, remove the emotions from your decision and ask what your gut tells you. Also, never forget the wild card risk; you don’t know what you don’t know!