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Alternative Investments - options for investors?

Residential property prices crashed. The stock market last year smashed. With the base rate at 0.5%, the best bank accounts are not yielding much more than 3%. No wonder that investors are looking for alternatives. Even if they only offered similar returns to cash and Equity, alternative investments would still diversify the portfolio.
So, what are some of the options for investors?

Agricultural Investments

An interesting alternative is the agricultural investment. The purchase of a farming operation may not be realistic for most investors, but now pooled investment funds, investors as little as £ 1,000 a year in jatropha plantations (Put a form of biofuel) about Green Oil Investments Wheat in Western Australia on Hurlingham Capital and teak plantations in Costa Rica on Costa Rica Invest.

While investors could also - and easier - purchase an ETF Commodities, such investment a credit to values in the ground and raw material prices and income type. Hurlingham wheat-based investments offer low risk (the net present value is partially protected) with yields of around 8% per year, and the conditions of 5-7 years. These look very attractive to income investors. Other perspectives as some of the biofuels investment in the market that offer much higher returns, but have potentially higher risks in the countries where the political risk is high. Not all of these systems provide annual income and some require a 5-15 year investment period of time (such as teak, even if purchased as an existing plantation).

This is still a relatively new area of investment, and investors should do, due diligence on the legal fine print of the scheme and the underlying Investment story.

Forestry

Forestry, on the other hand, has a long history as an investment for high net worth individuals in the UK. There are significant tax breaks to pay for forestry - no income or capital gains tax, and investment in forestry are free of inheritance tax Liability once they have owned for two years.

The returns are volatile, but can nice. Although forestry income fell by 31.6% in 2007 enjoyed 2008 still saw a 7% annual return - path to the future of the business or residential real estate or the stock market sectors.

However, it is an expensive business to get - about FIM funds available, but the minimum investment is £ 50,000. And this is a long-term investment - it may take twenty years to Harvesting a plantation, during which time there are no returns.

Vintage cars and boats

More "lifestyle" investment include classic cars and boats. Again, there are potentially a tax advantage - because they are a waste of assets, such assets have no liability CGT. (Remember not, however, that this also means losses can not be against gains in other assets such as shares claimed.) Pre-1973 cars and a zero rate of vehicle tax have - if you still need to get it MOT'd.

For novice vintage car owner, a good proposal is a car with a strong Owners' Club, what to choose a good source of advice. The owner must be able to keep the vehicle in perfect condition - So this is not an investment company to if you are sometimes short of funds. In fact, it costs money every year, insurance and maintenance, and pays no income - so if you do not make a good return on investment at the end of it, you've lost. However, there is a market that can be used on a relatively low cost. For example, an MGB Roadster brings you back £ Set 6-8.000 - less than a new Ford Mondeo. And of course if you drive a car, nobody's stopping you - if it could more than a few hundred miles per year, and one reducing the capital value of the car.

There is no index for historic prices, so investors need to price for each car they in Research hotels. Some cars are good - others have done, though, have fallen back. Morris Minors have lost 40% of their value since the 1980s. Investors have their own Work to do here - it would seem, not all asset managers and consultants in this area should, as in forestry or wine investment.

It can be difficult be, for sale, especially at the upper end of the market. In a recession, it is be difficult to relieve Vintage Bugatti - and auction houses such as Bonhams ( title = "http://www.bonhams.com" target = "_blank"> http://www.bonhams.com) the department has a special classic car, are demanding high fees.

Investment in art

Investing in art is perhaps the most attractive investment lifestyle; again the entry point can be very low, particularly with modern art prints. You can still a Picasso print for less than £ 1,000.

However, the art often have a "sold recession proof," it is not true. The Art world is vulnerable to bubbles - Pop Art, Andy Warhol, above all, high prices fetched in 2007, but the bottom fell out of the market last year. And some high value works by Damien Britart Hirst Doyen failed to sell in the period immediately after the Lehman crash. On the other hand, if you buy works of an artist or a school that is not currently in fashion, and they get "discovered", you could Lucky Strike.

Who wants to invest in the art market should be extensive research work before they look at their wallets out. The auction Houses Christie's and Sotheby's are a good source of information, but of course they have a vested interest; target = "_blank"> http://Artprice.com is an excellent resource. But taste is subjective, of course - there is no objective to find value criterion, since it shares.

Sun although Art investment offers both the perspective of diversification and positive returns, it is difficult to see how investors able to achieve this in practice.

It is also worth mentioning that the art is an illiquid market with other high transaction costs for buyers and sellers (Auction houses charge a commission of 10%). There is no market for "mirrors" or short-term trader. There are no tax benefits of investing in Art, and those to purchase images to be placed in a SIPP notice that they will not be able to hang on the wall - the personal use of the SIPP Assets is excluded.

But the great difficulty with both vintage and art investment is that it is fatally easy to rational investment with emotional attraction to be confused. That's even worse with other alternative investments, wine - because at least with the art when you hang a picture on the wall, not destroy it, its investment value. With wine, you open a basement for your bottle, and your investment is just gone.

Wine

But wine is very good in the previous years did. The Liv-ex wine index stood at 120 in 2005, and reached 264 in the summer of 2009. By definition, the annual supply of wine from top vineyards in France not to increase. hold vintage wine with age better the longer you so the more the price should increase when you have made the right selection to . Begin

Wine is another investment that is free from capital gains tax. If you buy it "in connection", as a pure investment, you also have not the duty - to pay a substantial savings. There are a number of consultants in this market; Albany Wine advice for investors who are investing in Bordeaux wines, and suggests, £ 10-20000 as a good starting point amount to create a diversified portfolio.

Of course, wine is playing only one capital There are no income during the term of the investment. To compare wine with stocks, you should compare not only prices, but the total return on shares, including Dividend income - and if you do this, the proceeds of wine does not look quite so attractive. Investors should also note that this is a popular area for fraud and fraudsters have been - set up a number of companies that investors buy wine en Primeur (basically a forward contract) went bankrupt, have not the money to investors in the vineyard passed. Check out http://www.investdrinks.org before To pay any money.

Completion

Alternative investments can provide useful diversification of a portfolio. However, it requires at least the same level Rigor, discipline and control than traditional stock market investing, if not more, given that these classes of assets regulated far less likely. Each market has its peculiarities, and there are a number of pitfalls, not least the potential to dry up liquidity and the risk of a change in taste.

About the Author

I'm a business journalist and spend quite a lot of my time checking out interesting investment stories - oil and gas, metals, agricultural plays, and most recently alternative investments. For more information on
alternative investing
, visit Stockopedia

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