5 Reasons People Invest In Alternative Investments

Grip Invest
Published on
Apr 27, 2023
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    5 Reasons People Opt For Alternatives

    As traditional investments such as stocks become increasingly volatile, investors are looking for alternative ways to diversify their portfolios and achieve higher returns.

    Alternative investments have emerged as a popular option for investors seeking to explore opportunities that go beyond traditional assets. In this blog, we'll explore the top 5 reasons why people invest in alternative investments and how to invest in them.

    What Are Alternative Investments?

    Alternative investments are any asset classes that are not traditional investments such as stocks, bonds, fixed deposits, and cash. Examples of alternative investments include commercial property (real estate), start-up equity, P2P lending, asset leasing, corporate bonds inventory financing, corporate bonds, hedge funds, commodities, art, wine, and cryptocurrencies. These investments often have a low correlation to the stock market and offer unique investment opportunities and higher returns.

    Reasons Why People Opt For Alternative Investments

    People invest in alternative assets due to the following 5 main reasons:


    One of the primary reasons why people invest in alternative investments is to diversify their investment portfolios. Alternative investments have a low correlation with traditional investments, which can help reduce overall portfolio risk.

    Potential For Higher Returns

    Alternative investments offer the potential for higher returns compared to traditional investments. For example, real estate investments may offer rental income and capital appreciation, while private equity investments may offer high returns due to the growth potential of the underlying companies.

    Non-stock Market Linked Options

    Alternative investments are not linked to the stock market, which can offer protection during market downturns. This is especially important for investors who are looking to protect their portfolios during economic recessions or market crashes.

    Unique Investing Opportunities

    Alternative investments offer unique investment opportunities that are not available in the stock market. For example, investing in art or wine can provide a chance to own a piece of history, while also providing the potential for high returns.

    Protection From Inflation

    Alternative investments such as commodities and real estate can provide protection from inflation. These assets tend to increase in value during times of inflation, which can help offset the impact of rising prices on an investor's portfolio.

    Examples Of Alternative Investment Options 

    Alternative investments encompass a wide range of asset classes that are not typically found in traditional investment portfolios. Here are some examples of alternative investment options:

    • Real Estate: This includes investments in commercial property, residential property, as well as real estate investment trusts (REITs).
    • Private Equity/Startup Equity: Investments in private companies or startup ventures with high growth potential. This high-risk, high-reward investment has the potential to generate significantly high returns. However, investing via a platform that does the due diligence and offers a smooth investing experience for retail investors is crucial.
    • Hedge Funds: Private investment funds that use various investment strategies to generate returns. Such funds let you invest money and then actively work to generate alpha (achieving a rate of return on an investment portfolio that exceeds the market benchmark) for you.
    • Asset Leasing: Asset leasing is a financial arrangement in which one party (the lessor) owns an asset, such as a piece of equipment, a vehicle, or a property, and another party (the lessee) rents the asset for a period of time in exchange for regular payments. It involves the renting of movable or immovable assets for a specified period. The owner of the asset, typically an individual or a company, leases it to the borrower for a specific period and at a certain cost. The lessee is provided with exclusive use of the asset in exchange for periodic payments throughout the agreed-upon lease term. 
    • Inventory (Inventory Financing): Companies hold inventory as part of their production cycle to ensure adequate supply. However, this inventory blocks the capital of the company. Inventory finance allows companies to raise capital against these inventories. This allows investors to invest and finance inventory for companies which in turn pays them returns.
    • Peer-to-peer Lending: Investment in loans to individuals through online lending platforms is also a great alternative investment option to earn lucrative returns.
    • Royalties: Investment in royalty streams for intellectual property such as music, movies, and patents. Once again, this requires deep knowledge and understanding of the underlying business. 

    How To Invest In Alternative Assets?

    Investing in alternative investments used to be challenging, as these assets often required high minimum investment and specialised knowledge. However, today there are many platforms available that make it easier to invest in alternative investments. One such platform is Grip, a multi-asset alternative investment platform where you can access multiple alternative investment opportunities together. It's a great way to diversify your portfolio beyond traditional assets.

    To get started, investors can create an account on Grip and browse through the available investment opportunities. The platform provides detailed information about each investment, including the expected returns, minimum investment, and risk profile. Investors can then choose the investments that best match their investment goals and risk tolerance.

    In conclusion, alternative investments offer a unique opportunity for investors seeking to diversify their portfolios and achieve higher returns. With the right platform, investing in alternative investments can be a simple and effective way to achieve your investment goals.

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    Disclaimer: This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip Invest Technologies Private Limited ("Grip") is not registered with SEBI in any capacity and does not advise, encourage, or discourage its users to invest or not invest in any securities. Grip is solely an execution-only platform and does not guarantee or assure any return on investments made by you in any opportunities sourced by Grip and accepts no liability for consequences of any actions taken based on the information provided. Your investment is solely based on your judgement. Investments in debt securities are subject to risks. Read all the offer related documents carefully.

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