Investment Strategies of History’s Wealthiest FamiliesSubmitted by Integras Partners on June 22nd, 2016
"Ninety percent of all millionaires become so through owning real estate" - Andrew Carnegie
Once you have established your family’s financial foundation with adequate insurance coverages, emergency and education savings your investment goals are focused on retirement. Even if you’re approaching that day or already retired, some of your portfolio has a long-term need to outpace inflation. The globalized economy has lowered corporate earnings expectations, forcing successful investors to look for alternative solutions beyond stocks and bonds.
Are Alternative Investments Right For Your Portfolio?
Financial media have increased their focus on “alternative investments”. This attention stems from many alternatives outperforming volatile stock markets. While the term is loosely defined, it applies to managed futures, hedge funds, private equity, direct real estate portfolios and infrastructure investments. Diversifying into real estate, private equity and private debt makes sense for wealthier investors who can isolate long term investments with adequate liquidity and income to handle shorter term needs.
What are the Benefits of these Alternative Strategies for Investors?
There are a variety of potential benefits, but those most frequently cited include additional diversification, returns that aren’t necessarily connected to the health of the overall stock or bond market, and potential tax benefits for investments outside retirement accounts.
How Can I Evaluate Whether They Make Sense For Me?
- Consider a short checklist for including or excluding alternative investments as part of your portfolio:
- Am I investing for a long time horizon?
- Does my portfolio need additional diversification beyond typical stock and bond asset classes?
- Is there an amount I can dedicate without impairing access to money in the near term?
- Is my risk tolerance sufficient for these type of investments?
- Do I have a trusted professional helping me find the right investment options?
While there is no hard and fast rule as to how many of the above need to be a “yes” for alternative investments to fit your circumstance it is certainly fair to say these are not for the DIY investor.
How Can I Access Alternative Investments?
Until recently, access to these investments was restricted by significant investment minimums, effectively limiting them to the wealthiest families and institutions such as pension funds, endowments and insurance companies. Today, they have become accessible to many investors through the independent advisor channel at firms like Integras Partners.
Features common to all of them is an indefinite time commitment and reliance on sponsors to execute timely strategies. We are conducting due diligence on a number of offerings focused on sector-specific real estate, private equity and lending to America’s middle market private companies.
Before making a decision about alternative investments talk to your financial planner about what investing strategies can help you meet your goals for your financial journey while still prudently managing the investment risks along the way.
The information provided is not written nor intended as tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.