A comparison of traditional and alternative investments

There is an ongoing debate on which type of investment is better – traditional or alternative. Over the years, with the unpredictability of the economy, the debate could not be settled. However, financial experts have drawn comparisons that would give people a good idea which instrument suits their financial standing:

Traditional

Traditional investments include stocks, bonds, and cash. They have a much lower minimum investment requirement (sometimes only up to a few thousand dollars), and they are very liquid. This means that if the investor needs the money, the process of withdrawing the funds won’t take very long. Mutual funds are the perfect example for this. However, one of the biggest problems of traditional investments is that they yield negative returns during a down market.

Alternative

Alternative investments include hedge funds, real estate, and managed futures, as well as private businesses. These are investments for people with a substantial amount of funding. For example, hedge funds and managed futures on an average have a $500,000-dollar minimum investment requirement. And though alternative investments are not as liquid as traditional investments (meaning the process of liquidation may take a lot of time and effort), they offer a considerably higher return, even when the market is down.

Scott Tominaga is the Chief Operating Officer of PartnersAdmin LLC. He has almost two decades of experience in the hedge fund and financial services industry. His company was established in 2008 with the intent to provide quality, outsourced solution to the dynamic back office needs of alternative fund industry. To know more about Scott and PartnersAdmin LLC, visit this page.