Equity Crowdfunding is your next alternative investment solution

Written by elecvPublished in

Investing in Alternatives

An alternative investment is an investment in asset classes other than stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as precious metals, art, or antiques as well as financial assets such as a real estate funds, commodities, private equity, hedge funds, venture capital, film production, and financial derivatives. These alternative investment assets have traditionally been held mostly by institutional investors or accredited, high-net-worth individuals because of the complex nature and relative lack of liquidity.

Advantages

Diversification: Investors can minimize their risk and control the correlation between their investments by allocating their financial resources across several instruments and areas. With the alternative investments, a portfolio can be much less dependent on the stock market's performance.

Higher returns: As you can see in the graph, the combination of alternative and traditional investments can achieve a higher return at the same level of risk than traditional investments alone.

Disadvantages

Accessibility: Alternative investments often have high minimum investments and fee structures compared to mutual funds and ETFs. Even though they are subject to less regulation, they also have had less opportunity to publish verifiable performance data and advertise to potential investors.

JOBS Act makes Alternative Investments more accessible

While most of the alternative investment types have been familiar to the investment community for a long time, one alternative investment solution, equity crowdfunding, is quite new. The Jumpstart Our Business Startups Act, or JOBS Act, is a law intended to encourage funding of United States small businesses by easing various securities regulations. President Barack Obama signed it into law on April 5, 2012, and the rulings of Title III of the act will likely come into effect in late 2014. Then, the JOBS Act will enable non-accredited investors to invest in start-up businesses and private firms.

Accordingly, equity crowdfunding is likely a great solution for any investors interested in alternative investments. The benefits of diversification and higher returns from equity crowdfunding can boost the value of your investment portfolio. Furthermore, accessibility may also be improved since businesses offering equity will often include additional information about what is required in Regulation D filings.

To find information on the latest alternative investment offerings or private equity offerings you can visit the Fund Wisdom Offerings section. If you are looking to further assess these investments or gain further insight into the market, we provide solutions to help.

Sources:

http://www.flatfeeportfolios.com/investment-portfolio-solutions/alternative-investments
http://www.forbes.com/sites/ryancaldbeck/2013/12/19/how-crowdfunding-can-boost-your-investment-diversit/

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