Wealth Management & Financial Planning

Wealth Management & Financial Planning

Are You Considering Alternative Investment Products?

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Families often ask us about investment opportunities they “learn” about from TV or radio commercials. Recently, we have received many questions about investing in “non-correlated assets” as alternatives to stocks and bonds. In the investment world, “non-correlated” describes an investment strategy in which price volatility is not related to stocks and bonds. Gold and real estate are a few examples of non-correlated assets.

The desire to reduce volatility within an investment portfolio is understandable. However, buyers should beware of false notions and bad math. Many commercials prey upon investors’ fears. Television and radio spots forecast the impending doom of the U.S. dollar. Other ads tout the resilience of gold during times of inflation. Yet other messages promote opportunities to gain wealth through real estate investments. How should investors filter these broadcast promises? How can investors differentiate fact from fiction? 

We are often asked why we don't advertise our investment returns’ performance history. Some families ask why we don’t make guarantees during our weekly radio spot or in this newspaper column. Financial service professionals in the security industry promote investments in a very different manner than the marketing companies advertising on TV. The securities industry is highly regulated. Marketing messages must meet very particular guidelines.

The requirements governing past performance require significant amounts of time and space. Compliance requirements also prevent us from forecasting future financial events. Many companies who promote alternative investments function as marketing businesses. They are not financial firms. Many of their claims are downright misleading.

Does bad marketing mean that alternative investments are inappropriate? No. Alternative investments might be appropriate components to include in an investment portfolio. Every investor’s situation is unique. Over the past 20 years, we have invested in gold via a gold exchange traded product. We have purchased real estate investment trusts (REITs) at various times. Alternative investments may be appropriate during various stages of the economy.

The search for non-correlated assets is challenging. There are times when bonds and stocks move in the same direction. Other times, stocks and bonds move in different directions. Markets have minds of their own.

A proper approach to portfolio construction demands diversification. A diversified portfolio consists of various asset classes. These assets may include stocks, bonds, cash or real estate. Tax diversification is another consideration. A tax diversified portfolio includes tax-deferred IRAs, Roth IRAs and other assets. Diversification allows us to take advantage of opportunities today. A diversified strategy also addresses tomorrow’s risks.


Beware of snake oil salesmen who make promises that sound too good to be true. But don't fail to consider options that make sense. As in all financial dealings, make sure to work with a competent advisor. Understanding the risks, opportunities and advantages associated with your investments is critical. Please understand the value of diversification. Alternative investments can have a place in your portfolio.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column offset=”vc_hidden-lg vc_hidden-md vc_hidden-sm”][vc_widget_sidebar sidebar_id=”sidebar-main”][/vc_column][/vc_row]

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