1 post tagged

alternative investment

Alternative investments as a hobby

I love alternative investments¬†‚Äď they are inflation-free and¬†are increasing in¬†price due to¬†scarcity and¬†age premium. Alternative investments are more than just looking at¬†different numbers in¬†financial reports, using, and¬†analyzing macroeconomics. It is a¬†hobby.

lifestyle

When you make alternative investments, you invest in the stuff you like or something about that you want to know more about. People invest in art not only because the picture can cost 3 times more in 10 years, but because they learned that this author made a masterpiece. They read books, go to art galleries and exhibitions, and told to people who are also interested in it.

People did not just get value from keeping the picture in the collection, they have got fun. They were traveling, meeting people, who became friends. They became a part of the art society.

Any type of¬†thing can be an¬†alternative investment¬†‚Äď people buy rights for¬†the¬†music, gemstones, houses, wine, violins, and¬†cellos (that are rented out, after which the¬†price and¬†the¬†quality of¬†sound get higher), exotic cars, books with signatures or¬†even boots.

How to learn

Get knowledge by reading books, journals, and blogs. I am interested in wine, art, and real estate, and I give tips about them. All of them are interesting differently: wine is the most profitable, art is the most inspiring and risky, residential real estate is the safest, and, commercial real estate is the most expensive, but profitable and slightly riskier than residential real estate.

books to read

Risks

During the recession, fewer people are ready to spend money because they need first all solve problems with business and a family budget. Some people must sell their investments, just because they don’t have enough money to pay for the bills. Therefore, the demand falls, and the amount of people willing to sell grows. Then the price also falls.

Investors say that stable cash is the¬†most expensive stuff at¬†this time because you get less money after selling your investment (image the¬†price of¬†the¬†stocks in¬†a¬†crisis). Fortunately, it does not¬†last long¬†‚Äď the¬†government makes huge inflation so that people buy more because later everything will be more expensive. If there is deflation, people keep cash, companies sell much less. Companies become bankrupt, the¬†market fails and¬†the¬†currency gets to¬†0 due to¬†the¬†printing of¬†cash for¬†the¬†social and¬†governmental sector and¬†payments for¬†the¬†state debts.

The¬†commercial real estate investment in¬†such times may lose the¬†renters because some companies close. Then you should find new renters and¬†give them 2 months for¬†free. These are renting holidays, that are given to¬†make renovations and¬†to¬†find employees. In¬†Russia renting holidays is not¬†obligatory, but¬†it is a¬†common practice. There are ways to¬†lower the¬†risks: For¬†example, my family rents out an¬†office to¬†the¬†municipal administration¬†‚Äď they are not¬†subject to¬†bankruptcy and¬†they stay in¬†one place for¬†decades. Therefore, you don‚Äôt need to¬†have an¬†administrator, who does HR, PR, and¬†finances, because you have a¬†constant client.

When to invest

The recession is also the best time to invest. If you have enough cash, just buy as much as you want. Usually, alternative investments weigh 5-15% of an investor’s portfolio (excluding real estate). I don’t recommend investing more if you don’t know too much about the sector and the item you invest in.

For¬†example, if you invest in¬†wine, you may be deceived about the¬†quality. You can also spoil wine by¬†keeping it at¬†the¬†wrong temperature and¬†in¬†the¬†sun. If you invest in¬†art, the¬†seller can sell a¬†picture for¬†double a¬†fair price. The¬†author of¬†a¬†picture may become less interesting to¬†the¬†public. That is why you should know the¬†sector by¬†reading books and¬†consulting with professionals. And¬†don‚Äôt keep all eggs in¬†one basket¬†‚Äď diversify.

If you are interested in art investment, or real estate investment, write me at daniil@koveh.com, and I will help you to make the right decision, buy the art in the EU and help with legal stuff. I will find the best real estate investment in Russia and Austria based on my experience, and the experience of my family, who through 4 generations were constructing real estate all over Russia.

Aug 13   alternative investment   Art   english   Investment