High Net Worth Investors acquired approximately $3.2 billion in real estate in the first half of 2016 and have shifted focus from a capital preservation to an income producing play.
It’s likely that as an HNW individual, at least part of your net worth is tied up in investments. Your portfolio probably contains a mix of traditional investment vehicles like stocks and bonds. Increasingly though, HNW individuals are turning to alternative investments in an effort to achieve non-correlated returns and enhance yield.
Here are 3 alternative investments that should be on your radar.
#1: Venture Capital
Successful startups that may return high multiples rely heavily on venture capital. Likewise, institutions, private corporations, and R&D often depend on private equity funds to help bring in steady capital. Venture capital funds can allow investors access to investment in new or expanding businesses that are believed to have long term growth potential.
#2: Private Equity Real Estate
Equity investments in real estate properties or development projects that are outside of the purview of the public markets. These types of investments require long term consideration but have the ability to potentially provide high levels of income and price appreciation.
#3: Private and Real Estate Mezzanine Debt
Another option gaining steam for HNWI is mezzanine debt. Investors actually own equity in a large property investment (like an industrial building or corporate office) where a lien secures the debt as a loan. Lien holders receive an income stream that is collateralized by the property or pool of properties; in other words, “real, tangible assets”.
Get Help Adjusting Your Investment Strategy
Some of these investment vehicles are trickier than others. If this is your first foray into the alternative investment market, you will need a solid advisor to help you figure out what could potentially be the right mix for you. Give us a call anytime to discuss adding some alternative investments to your portfolio.