Everyone wants to be able to safeguard their financial future, and no one wants to expose themselves to undue risk, but there’s a problem. All investments, including alternative investments, have a degree of risk as nothing is ever guaranteed. The issue, then, is how you balance risk and reward without getting burned.
With this quick guide, we’re going to show you how to make smart moves and keep a level head when you’re assessing a new opportunity. You don’t want to miss out on the potential for a financial return, but at the same time, you don’t want to rush and make the wrong choices.
Verifying your alternative investment is 100% essential
Let’s take cask whiskey as an example. How do you know you’re investing in the whiskey that’s being advertised? How do you know you actually own it? How do you know who will be storing it, handling it, and making sure it doesn’t degrade and lose all its value? The answer is that you need to make sure you’re given a Delivery Order that names you as the owner and clearly outlines what you’re investing. Without this vital document, you won’t be able to conduct the required due diligence.
Make sure the offer doesn’t sound too good to be true
Being contacted by someone you have never heard of with a guaranteed income stream is great, but it’s not going to happen. Seeing an advert or finding an alternative investment opportunity when you go looking is great, but having someone cold-call you is not. Make sure you take a moment to stop and think about how you heard about the opportunity and who told you about it.
Factor in how long you will likely need to hold the asset
If you’re in the right place at the right time, you can flip stocks and shares in a matter of weeks, but not every asset is the same. Alternative investments can appreciate at completely different rates, have vastly different audience sizes, and have variable levels of price volatility. The best solution is to speak to an expert in the specific area you want to invest in.
“The market really works on long-term holds. You really want to be thinking 10 years or longer,” says Alphie Valentine, Co-founder of Hackstonsthe whiskey specialists who provide opportunities for investment and consumption. By having this level of expert input, you can make informed choices about where you want to put various portions of your portfolio.
Remember that past performance is a guide, not proof
A report that highlights how similar investments have performed over time is great, but it will never be a guarantee of what your investment may do. Use the data for fact-finding and to understand the market, but don’t use it as your sole reason for making an investment. Trends can go up, they can go down, and they can stagnate.
Walk away the moment you detect pressure selling
A reputable team will never apply pressure or try to persuade you to take out a position for their own gain. Look for someone established and trustworthy who has a public presence, such as Hackstons on LinkedInand always go with experience. Yes, there will always be new entrants to the market who will look to gain traction with highly competitive offers, but do they have the necessary knowledge to connect you with the right opportunities?
Taking that little bit of extra time to find the right people will ensure that you get those key pieces of information so much quicker. You can benefit from their experience and track record, as well as giving yourself the peace of mind that comes from knowing that you’re taking a pragmatic approach to diversifying your portfolio.
Take your time to consider all of your options
While you don’t want to miss out on a great opportunity, it’s essential to remember that there will always be more options and choices out there. It’s very easy to get caught up in the moment and feel like you have to choose between the offer in front of you and no offer at all, but the world of alternative investments just isn’t like that.
By taking your time and trying to keep your emotions and passion in check, no matter how exciting the opportunity may be, you can focus on the numbers. After all, it’s the numbers that will help you maximize any potential returns.
Slow down, breathe, and think about this from a long-term perspective. Once you do that, you’ll be giving yourself the best possible chance of success.
