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.
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.
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.
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‚Äôt 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.
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‚Äôs portfolio (excluding real estate). I don‚Äôt recommend investing more if you don‚Äôt 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¬†firstname.lastname@example.org, 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.