If you are interested in investing, you might first think of stocks and bonds. But there are myriad alternative investments to explore like fine art, wine, cryptocurrency, and real estate.
Non-traditional asset classes have risen in popularity in recent years. The value of alternative investments in professionally managed funds reached $10 trillion in 2019. [1] Alternative investments can diversify your portfolio. If you are interested in taking the leap, here are five alternative investment platforms to know.
Alto
Asset types: Cryptocurrency, art, venture capital, real estate, and more
Who it’s right for: Alto is an alternative retirement investment platform offering two types of individual retirement accounts with different fees: Alto IRA and Alto CryptoIRA.
Alto IRA lets you invest in alternative asset classes including venture capital and real estate. You can choose between starter or pro options depending on how much you want to pay for the service. When you open an account with Alto, you get to decide what type of IRA you want: traditional, Roth or Simplified Employee Pension (SEP).
Alto CryptoIRA enables you to connect with Coinbase and use your retirement savings to invest in 135 types of cryptocurrency. This option has a $10 investment minimum.
Alto users range from just starting out in their careers to well into the 70s, with a similarly diverse range of incomes and backgrounds, says Eric Satz, founder and CEO of Alto. “Whether you're a non-accredited or accredited investor, interested in fine wine or crypto, early in your career or approaching retirement, Alto has options to fit your interests and financial goals,” he says.
Fundrise
Asset type: Real estate
Who it’s right for: Real estate investment platform Fundrise can be used to diversify your portfolio. It offers different account levels ranging from a starter account with a $10 initial investment all the way to a premium account with a $100,000 initial investment. Over time, Fundrise adds new assets to your portfolio, providing further diversification without any additional investment.
With this variety of options, novice investors, experienced, and accredited investors can use the platform.
“In general, we find that most of our investors are investing for the long term. Fundrise investments, like all real estate investments, should be viewed as long-term investments,” a Fundrise spokesperson says.
Masterworks
Asset type: Art
Who it’s right for: Masterworks facilitates the buying and selling of shares in blue-chip artwork. After signing up with Masterworks, you’ll receive a call from their membership team to determine if art investing is the right fit for you. If you decide to invest with Masterworks, the platform takes a 1.5% annual management fee and 20% of future profits.
Allen Sukholitsky, Masterworks chief investment officer, says the benefit of investing in contemporary art is historical price appreciation. The art market moves differently than other alternative asset classes, Sukholitsky says. By including low correlation assets to your portfolio you can better manage risk levels, he says.
“While historical performance is no guarantee of future results, it does serve as a good starting point for portfolio analytics,” he says.
Sukholitsky says Masterworks investors range from 18-years-old to 90-years-old, in all 50 states, and from many different countries around the world.
Vinovest
Asset type: Wine
Who it’s right for: Vinovest is a platform for investing in fine wine. You can start with Vinovest by taking a quick questionnaire to establish your preferences and risk appetite. With the help of master sommeliers, the platform builds you a portfolio.
“Vinovest’s goal is to break down barriers, draw similarities between stock market and wine market, and present wine as a suitable alternative for the everyday investor,” says Anthony Zhang, CEO and co-founder of Vinovest.
You could become a Vinovest investor with as little as $1,000, but the platform is now introducing a new offering with no account minimums and no minimum hold times, according to Zhang. You will own the bottles of wine in your portfolio with the ability to buy and sell. If you are a wine enthusiast as well as an investor, Vinovest allows you to enjoy your wine for a 3% early withdrawal fee, Zhang says.
“The platform serves a diverse range of clients, from first-time wine investors who are just dipping their toe into the market to family offices with extensive experience in trading alternative assets,” Zhang says.
Yieldstreet
Asset types: Art, commercial real estate, and more
Who it’s right for: Yieldstreet offers investors a variety of product types and asset classes. You can use Yieldstreet to diversify your portfolio in several ways. Yieldstreet Prism Fund gives you access to a number of different asset classes with a $500 minimum and quarterly distributions. More than half of first-time investors choose this option, according to the Yieldstreet website.
More experienced investors might be interested in using Yieldstreet to build a custom portfolio or to invest in short term notes. Custom portfolios require a minimum of $10,000, while short-term notes require a minimum of $1,000. Both these portfolios are available only to accredited investors. Yieldstreet also has an art-focused offering with a required minimum of $10,000.
Yieldstreet’s goal is to make alternative investment options available to all individuals. Beginners, as well as more experienced investors, interested in portfolio diversification can make use of his platform.
Understanding the risks
Just like any investment, there’s potential for significant returns and potential for risk.
“The risks really come from a program failing for some reason,” says Timothy Nihill, a certified financial planner and CEO of Twin Shores Wealth Management.
Alternative investments can be used to diversify your portfolio while learning about an asset class you are interested in, but it is important to do your homework. “It's not something that I would recommend an individual do on their own unless they had the knowledge of the industry or the business or the sector that they're looking to invest in,” Nihill says.
Image: Olga Shevtsova / Getty
