Welcome to week six of the Husky Investment Tournament!
When you think of investing, what comes to mind? Most people when asked this question will resort to talking about stocks and bonds. However, it is important to note that there are different vehicles you can use to invest. Most people call these other types alternative investments.
Starting first with real estate. Real estate investing has been around longer than the financial markets we see today. A few strategies include buying and holding for price appreciation, renting the property out to tenants, and flipping houses. Real estate also offers an investor a tangible product, unlike the financial markets.
Next, we can move on to hedge funds. Hedge funds offer high-net-worth investors an avenue to take more risk than typically seen by a mutual fund. Most hedge funds have unique strategies and offer only little insight into their practices. To invest with a hedge fund an investor needs to have an income over 200k or a net worth of at least a million.
Another alternative investment is precious metals. Gold comes to mind first and investors are attracted to the stability of these metals. They are typically used to hedge against inflation. Most of the metals have been around for many years and moving into the future they should continue to be an investment option.
The three investment types above are most commonly talked about when referencing alternative investments. Collectibles and Cryptocurrency could also be grouped into this bucket of investments. It is important to note that the best type of investing is when you are diversified. Don’t put all your eggs in one basket, and take advantage of some of these alternative investments.
In this week’s video, Jun Min, professor of marketing in the Michigan Tech College of Business, illustrates what economic moats are and why they are important in business and in influencing the stock market.