Alternative Investments

[HarrisShubert]

This might be a little off topic, so apologies in advance. Just wondered what and if people were using alternative investments?

 

[beasty]

What do you mean by alternative investments?

Highly geared short term speculation on precious metals, a tracker fund, investment in other companies? Binary options?

 

[garyk]

If you mean am I going to hand my money over to some bizarre scheme offered to me by someone I don't know and have never met then not a chance.

If its something I can buy myself, and possibly use, own and hopefully make a few quid then yes I do my own 'alternative' investments.

 

[JoeInTheMiddle]

A chap ring me about investing in fine wine last night.

Long term the supply of rare vintages only decreases so prices rise.

All very interesting, but I prefer more liquid assets (If you'll pardon the pun)

Peer to peer lending is that alternative?

It's certainly interesting and I am a keen supporter of.
Wouldn't bet my entire portfolio on it though.

 

[The Byre]

I invest in two things -

1. Myself. i.e. I invest in new businesses that I can run. That way, I only have myself to blame!

2. Shares in solid companies that have good P/E ratios. e.g. Ford. It pays a 15% dividend, for the simple reason that lots of people buy Fords. They may not be the World's most exciting company, but if I want excitement, there are better ways of achieving this than giving my money to people who may or may not give it back!

All these 'New Age' investments and dodgy schemes really don't interest me.

 

[Peter Durrant]

Well, yes there is certainly some dodgy schemes which seem to fall under the umbrella of 'alternative investments'. These are obviously to be avoided.

However, there are other more credible investment option which are non-financial in nature and therefore get thrown into the 'alternative' mix.

But don't throw the baby out with the bathwater. There is good portfolio diversification options if you are willing to look discerningly.

Investing in gold, for example, is technically alternative, but that's not to say it's foolish.

Yes, risk is attached. But anyone who picked gold investment at the start of the year won't mind the risk given the reward will they?

Selectively viewing such 'alternative investments' in what matters - sieving the scams from genuine options. Things such as metal investment can be profitable, as can some container leasing options for example. But its never advisable to take a punt on any high-yield rubbish.

 

[JEREMY HAWKE]

Classic cars but do it yourself and dont get involved with anybody

Thats what my mum used to say

 

[Peter Durrant]

Classic cars but do it yourself and dont get involved with anybody

Yes something I've always been interested in.

Here's a question (and a simple one): do you get to drive em?!

I'd be keen unless you have to leave your beauties under a taup

 

[JEREMY HAWKE]

Yes something I've always been interested in.

Here's a question (and a simple one): do you get to drive em?!

I'd be keen unless you have to leave your beauties under a taup

Only buy them yourself you dont need to buy a Bugatti There is money to be made in modern classics At the moment I have an old Saab 900 convertible that I will hang on to for a while now .

 

[HarrisShubert]

Cars is a very interesting one. Art has always interested me also, wouldn't know where to start with that though!

 

[Swisaw]

I have lots of money to invest. if you have an investment idea I will provide the full capital. Send me full details including the four pin number of your credit/debit card. I will add the full capital to your credit/debit card.

 

[JEREMY HAWKE]

I have lots of money to invest. if you have an investment idea I will provide the full capital. Send me full details including the four pin number of your credit/debit card. I will add the full capital to your credit/debit card.

There are people that would read this then give you their card no !

 

[Gregory Diehl]

I've worked with providers of a few different types of offshore investments, mostly in the agricultural niches like coconut, papaya, and other tropical fruits in South American and Southeast Asia. The idea is that they have organic growth built into the principal.

 

[Peter Durrant]

As for the cars, its my kind of investment! Basically a hobby, which a few years down the line might end up earning you a few pounds

 

[Shonda Myers]

Private equity, direct investments in start-ups and private companies, venture capital, real assets, hedge funds, fund of funds, private placement debts. ~ thestreet.com

Does that make sense?

 

[garyk]

Private equity, direct investments in start-ups and private companies, venture capital, real assets, hedge funds, fund of funds, private placement debts. ~ thestreet.com

Does that make sense?

What about tinned meat??

 

[The Byre]

Vintage cars are only an investment if you have an encyclopaedic knowledge of cars and are able to renovate them properly and turn them around quickly.

It's a bit like property - the fundamental value will multiply your investment in renovation - every penny you put into a classic with an end value of £200,000+ will be multiplied ten-fold, every penny you put into any car with an end value under £10,000 is a penny wasted.

 

[garyk]

Vintage cars are only an investment if you have an encyclopaedic knowledge of cars and are able to renovate them properly and turn them around quickly.

You do need *a fair bit* of knowledge but it doesn't have to be in depth. I would say the reverse is true on the turn-around though. Its about keeping them longer term, 5-10 years to get a really good profit.

But agreed with regards value, if only I could have afforded a Db5 for 65-70k 10 years ago to sell it now for 350k Instead I got a 1600e cortina for £700 that I sold for £1250 3 years later!

 

[AnnaDanishek]

I prefer to invest in real estate. It doesn’t take a lot of time and one of the most reliable investments. Also it is my future pension and great support for my children. Yes, it needs some money, but they will be returned with a profit! According to https://tranio.com/traniopedia/tips/property_investment_strategies/a safe option needs at least €100K. Up to 50–60% of the property value can usually be financed. For example, having €300K you can buy a flat or a student accommodation expecting 5-7% yield for short-term rentals or 2-3% yield for long-term. To my mind it is not bad at all.

 

[Clinton]

I prefer to invest in real estate. It doesn’t take a lot of time and one of the most reliable investments.

It's a good thing we never have property price crashes.

 

[david64]

You can look at Bitcoin and other digital currencies. I think they should be taken cautiously for numerous reasons; and I think Bitcoin itself is a dead end as it does not have properties that lend it to do what it was intended to do - be used as a currency. The security aspect of it is also troubling, though you can get good security via Coinbase. Via hacks and the Mt. Gox failure, I know people, including myself, who have lost a total of $550,000 in Bitcoin.

This is something I would be looking to load up on once it hits 30 on 1 week RSI:

https://cryptowat.ch/kraken/ethbtc/1w

Bitcoin also has some ultra-high-stakes gambling platforms, see: BitMEX, 1Broker and SimpleFX. These sites have up to, I think 250X leverage, but at least 100X.

I really like the total return swaps (P2P lending) on Bitfinex. The returns have been choppy, but you will generally make 1-2% interest a month from supplying USD for other people's gambles. As soon as their gamble gets into a position that can't be repaid, they are liquidatied. So you don't loose your capital.

My main call for the long-term is gold mining stocks. I'd be interested in hearing on other depressed stocks with long-term potential.

Assets I wouldn't want to hold: property in the developed world, national currencies (except USD), Windows OEM licences.

 

[MJN]

The terminilogy 'Alternative Investment' covers a very broad remit. Varying from what I would call the 'cold call / boiler room' type investments - Wine, Gems, REM's, Art. Right through to hedge funds, non mainstream quoted indices, OEIC's, LNO's and Unquoted Bonds
Don't get me wrong there are product providers out there that do really work within these areas and are hugely successful but the majority of participants within this area are in it to make a quick buck and disappear. (I am talking about the former 4 options)

I work within the VC (Venture Capital), PE (Private Equity)& Cornerstone Investment area - Primarily with HNW's, SCSI's and Business Owners - So I'm well versed in this topic and well aware of these areas that the retail investor usually falls fowl too. However there are also what we would call more 'mainstream' areas with the AI markets. The unfortunate side to this market is the fact the you have to be a qualifying investor in order for you to participate and take the benefit from these types of schemes, which typically leaves the average retail investor with their hands out.

You will have schemes varying from - Bonds, Mini Bonds, Loan Notes, Fractional Ownerships etc.
primarily offering asset backed securities within this field,
Or EIS / SEIS for tax relief within companies looking for cash injections in return for shares.

This is a growing market and an area to date that only a percentage of the population have access too due to the requirements however, even in the past 3/5 years it has become ever more popular in demand through intermediaries giving access to investors using new found routes to market.

Reading a number of other comments - you should also consider whether you are looking for something more passive or active & also relative or absolute performance. This will allow you to concentrate on a more specific classification of investment.
Through my experience I have also concluded that general market positions open to the majority typically tend to hold more volatility due to the speculation of individual investors buying / selling due to macroeconomic instability, creating more speculative performances.
Whereas the more unconventional investments are rarely even inversely correlated to market conditions. They will usually have no currency risk, interest volatility and if you find the right fund will also have an automatic redemption date as supposed to having to sell at either a discount or premium.

I hope this has helped

 

[hawts]

A chap ring me about investing in fine wine last night.

Long term the supply of rare vintages only decreases so prices rise.

All very interesting, but I prefer more liquid assets (If you'll pardon the pun)

Peer to peer lending is that alternative?

It's certainly interesting and I am a keen supporter of.
Wouldn't bet my entire portfolio on it though.

Hi @JoeInTheMiddle I work for a peer to peer lending company called RateSetter - one of the biggest in the UK. Fire away with any questions!

Interestingly we seem to be very popular with IT consultants. I don't know if this is what you do?

 

[MJN]

P2P lending is a form of alternative investing - You'd almost be acting as an 'Angel Investor'.
You will have to do considerable amount of research depending on where you are sourcing the deal from. Although nowadays you can gain access to P2P from vendors who release their capital raise on an open platform through agencies that will hold opportunities online.
Like anything I would prefer something with a little larger track record and not just a 'sound' business plan, as these are still only forecasted projections and not actual performance. Majority of the clientele that I work alongside prefer a company that is still in a growth type phase but past the initial seed investment. They tend to be more reliable and consistency is something we lack in todays investment world.
If you are looking at alternatives i'd also say stick to bonds / loan note type schemes as a creditor you have more security in loss prevention i.e - Capital protection & Preservation of wealth. Meaning if a company goes bankrupt, liquidates or simply closes shop you as the creditors have primary legal charge over assets. In most peer to peer you own a percentage of the business, where by you share in both profit and loss, also only being paid out once creditors have received adequate compensation. Obviously dependant on the type of share acquired you may be able to limit your losses.
There are both ups and downs in all markets. However, i'd always consider the downside risk and whether you have the appetite for them before assessing your upside potential.

Yet again, I hope this has helped.

 

[hawts]

P2P lending is a form of alternative investing - You'd almost be acting as an 'Angel Investor'.
You will have to do considerable amount of research depending on where you are sourcing the deal from. Although nowadays you can gain access to P2P from vendors who release their capital raise on an open platform through agencies that will hold opportunities online.
Like anything I would prefer something with a little larger track record and not just a 'sound' business plan, as these are still only forecasted projections and not actual performance. Majority of the clientele that I work alongside prefer a company that is still in a growth type phase but past the initial seed investment. They tend to be more reliable and consistency is something we lack in todays investment world.
If you are looking at alternatives i'd also say stick to bonds / loan note type schemes as a creditor you have more security in loss prevention i.e - Capital protection & Preservation of wealth. Meaning if a company goes bankrupt, liquidates or simply closes shop you as the creditors have primary legal charge over assets. In most peer to peer you own a percentage of the business, where by you share in both profit and loss, also only being paid out once creditors have received adequate compensation. Obviously dependant on the type of share acquired you may be able to limit your losses.
There are both ups and downs in all markets. However, i'd always consider the downside risk and whether you have the appetite for them before assessing your upside potential.

Yet again, I hope this has helped.

You're talking about P2P platforms that list businesses to lend to. RateSetter just offers 4 products that differ on term. Head over to Moneysavingexpert to see Martin Lewis' commentary on the big P2P lenders in the UK. It's a great review and Martin is a trusted source.

 

[MJN]

I have had a very brief look into the website. Which clearly works well in terms of operations. However, what springs to mind is firstly how are the loans secured? Does the investor know where the funds are placed or who their capital is funding? As I would assume each company or individual looking for a loan would have separate risk factors, so how does the company evaluate potential synergy apart from matching interest with term time requirements? This should surely only be open to investors who qualify and not the general public. Considering the FSCS also wouldn't be available to them should anything fall through. Key note - Nothing has fallen through to date which is a good track record since 2010

 

[hawts]

I have had a very brief look into the website. Which clearly works well in terms of operations. However, what springs to mind is firstly how are the loans secured? Does the investor know where the funds are placed or who their capital is funding? As I would assume each company or individual looking for a loan would have separate risk factors, so how does the company evaluate potential synergy apart from matching interest with term time requirements? This should surely only be open to investors who qualify and not the general public. Considering the FSCS also wouldn't be available to them should anything fall through. Key note - Nothing has fallen through to date which is a good track record since 2010

Hi @MJN it's probably worth taking this offline for more detail. Briefly though to answer your questions:

1. Approximately 20% of our loan book outstanding (£592m) is secured.

2. Investors have a portfolio of loan contracts so can see the underlying loan but they are anonymous - investors don't know who the borrowers are and vice versa.

3. RateSetter have a stringent credit policy and only aim to lend to borrowers in the top third of the credit spectrum. Underwriting processes are very similar to traditional lenders and there is a Provision Fund to protect investors against borrowers defaulting. It is not a guaranteed scheme but it has ensured every investor has received every single penny expected since RateSetter began trading. The Provision Fund is funded from fees charged to the borrower based on how risky the borrower is.

4. P2P Lending is available to all types of investors and yes, the FSCS does not apply and therefore capital is at risk.

Hope that helps!

 

[TODonnell]

- Don't invest in something you don't really understand.
- Oenophilia is a peculiar snobbery. Wine can spoil. It can be hyped beyond its value. It requires storage.
- Diamonds are worthless; the whole market is a hype. Antique jewellery at the right price yes, loose diamonds, no, not for the long haul.
- Buy value when the bottom falls out of a market; don't buy when the shoe-shine boy is thinking about investing.

My 2p. I'm not an investor.

 

[hawts]

Diamonds are worthless; the whole market is a hype. Antique jewellery at the right price yes, loose diamonds, no, not for the long haul.

My brother has dabbled with diamonds and would agree with the above rhetoric. He found them easy to buy, very difficult to sell!

 

[Peter Durrant]

As stated, gemstones can be harder to sell (at a good, profitable rate), then bought.

They are not, therefore, a traditional give and go type of investment. The ease of sale (or lack thereof) makes them tricky, but not impossible. If you are not looking at a quick turnaround, but rather waiting and seeing, they could turn a good return if the right buyer comes along.

There is a lot to be said of having the right contacts in this respect. Having a relationship with sellers and dealers of gemstones is needed for any kind of 'quick sale' on gemstones. A brokerage can really help with the transitional part of the process.

But really, I feel easier investment is available (still 'alternative', mind you), through gold. A punt? Always. But worth it? In my opinion it is at the moment, as part of a wider portfolio of spread risk.

That's my two cents on the alternative thread, gems and metals concerned.