More… More What More? This is how investors with crazy amounts of money yell. Today we will cover the assets to invest apart from the usual Equity, Bonds, Government Schemes, or Property. These are called Alternative Investments. There is a demand for alternative assets – primary because of 2 reasons. First no or little correlation with existing mainstream investments. Second, alternative assets are accepted worldwide by the people who know their worth & engaged in collecting them.

Alternative Assets are not new investments. Many of them have a history of hundreds of years but alas – no records. Barring few assets like collectibles, most of this is still with no organized industry.

A judicious portfolio built out of these options can hopefully ensure a steady return in the short and long term,  depending on the perception of the investors and holding capacity.

Why Alternative Assets Exists?

Decontrol: Most assets like Equity or Companies are managed by rules & regulators. The alternatives assets are not. Experts from alternative suggest that “no control” offers a better price discovery of rare assets.

Correlation: Industry experts say commodities, as well as art (paintings, sculptures, etc), are inversely proportional to the markets. They offer hedge to conventional markets as well as diversification.

What are these Alternative Investments?

The new age investor has become smart. Art, sculpture, antiques, currency and stamps are just some of the segments, that have come back again. Going by the economic meltdown, people are switching to these forms of alternative investments.

Art (Paintings & Sculptors)

M F Husain, Shuvaprasanna, Subodh Gupta, Tyeb Mehta, Rekha Rodwittiya, Arpana Caur, T V Santhosh, Bhupen Khakar are some of the names which are “blue chips” in the art scene these days. However, like equity markets a new trend visible these days is to find a young artist. So names like Atul Dodiya, Anita Dube, Bharti Kher and Jogen Chowdhury have also become well-known and their prices too run into crores.

Sculpture too has come up in a big way. Popular names include Ravinder Reddy (fibreglass), K S Radhakrishnan (bronze), Daroz (pottery), Chintan Upadhyay and Anish Kapoor.

Investors are also looking at artists outside India while there is still opportunity. Even European art, which has always been hugely expensive, is not out of bounds for Indian investors now. Salvador Dali sculptures, Pablo Picasso and Andy Warhol paperwork, Jorg Doring pop art, Serge Mendjisky landscapes, and Hughes work’ have just been made available in India.

This is very true of art buyers in the United States where the recession has been crippling enough for them to sell off their assets, including art, at huge discounts.

Coins

Rare coins is a good option too, but one has to be extremely careful while buying as premiums often narrow on collector coins when gold bullion prices increase.

The value of a coin will always depend on a number of factors, including the age and availability of the coin, its condition, for example, whether it is dented, scratched, or stained, and trends within the precious metal market. It is advisable to specialize in a particular area or time period, when collecting coins.

As far as coins as an alternative investment goes, one should never invest in new issue coins as they are released  from the mint – be it any mint in the world. Doing so, is a guarantee that you will lose money. Only buy these modern
issue coins if you get great pleasure from owning them or as a gift.

Antiques

The basic theory as to why this works as an alternative investment is that the origin of antiques is often stated as being important. Good origin will often add to the cost, and the value, which is two different things, sometimes without a high degree of correlation between them.

Class antique and rare books also fall into this category. Books contain valuable information and knowledge. So books with limited copies have huge second-hand value.

Classic cars are another option for those interested in automobiles.

Stamps

Stamps have the added benefit of being small and portable, compared to many other tangible investment options. However, if you are looking at getting returns on your investment, then you should consider a few things. Firstly, think about specializing in a particular type of stamp, or focus on a specific period in history.

Secondly, check the condition of the stamp as this will affect its value considerably.

You should also look beyond the stamp itself, for any interesting idiosyncrasies such as unusual watermarks, postmarks, perforations, or stamps which were printed with errors.

Among the new, Bitcoins, Watches, Historical Properties, Boats (Yacht) are newly found loves.

This is an interesting world indeed! But it lacks knowledge, limited market reach & organized buy-sell features.

Alternative investments are not long-term ventures as it takes some time for them to achieve any significant increase in value. Therefore, if you want to maximize the chances of success, you should carry out some research into your field of interest and you should also consider seeking professional guidance (We are NOT for Alternative Assets).

So, tread carefully.

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