Ten things you never knew about alternative investments
- If it is not cash, shares, property or bonds then it’s an alternative investment. This covers everything from gold or stamps to peer to peer lending.
- Serious investors buy alternative investments to spread their nest-egg around some more baskets. But they’ve got plenty of money and possibly won’t be hit too hard if they lose it.
- Warning klaxon: many alternative investments aren’t regulated and are associated with more than their fair share of scams. Don’t consider this investment class at all until you’re debt-free and have a sizeable cash cushion. And don’t think you’ll make your fortune either.
- Gold is a popular alternative investment because it’s tangible (ie you can see and touch it) and, unlike almost everything else, it will always have a value because there’s a finite supply of it.
- You can buy physical gold in bars and coins etc. But don’t. You’ll have to pay to store it and you don’t get an income from it. And even though gold is a popular investment, it’s a volatile one. Look at the charts at www.gold.org to see how its value has moved up and down
- Investing in wine or whisky does have the benefit that if your bottles fall in value, you can at least drink them. Ironically, this is also an illiquid investment – in that if you need to sell quickly you may not be able to. And wine prices also fluctuate wildly – see www.liv-ex.com
- You’re also going to have to pay to store fine wine (not in your fridge). Also be aware of scams – use a reputable wine merchant.
- Valuable stamps grab the headlines when they reach auction. Sadly those in your granddad’s album probably are worth little. A better route might be to buy into a fund investing in stamps (see www.stanleygibbons.com).
- You’re unlikely to make money from art unless you’re lucky enough to find a forgotten Renoir in a junk shop or discover the next Damien Hirst at a graduate show. But at least you’ll have something nice to hang on your wall.
- A more accessible (if less aesthetically pleasing) alternative investment is peer-to-peer lending where you lend money to individuals through websites such as Zopa or Funding Circle. You’ll get a better return than on savings accounts at the bank but that is because it’s not guaranteed you’ll get your money back.
● A comprehensive guide to whisky investment is at https://next.ft.com/content/a066332c-5acb-11e5-9846-de406ccb37f2
● Visit www.spectator.co.uk/2015/05/first-class-stamps-for-investorsfor all you’ve ever wanted to know about stamps.
● Find out more about peer-to-peer lending at www.uswitch.com/loans/guides/peer-to-peer-lending-uk