Alternative investments can help reverse the slow growth

In this era of financial crisis, many investors are facing an economic slowdown.

GDP downward. Europe is slowing. China is slowing. It looks like everyone is slowing.

We have a very low bond yields and low interest rates of banks. We have increased the volatility in the market. And people are just used to it. It has become the new norm.

Now, obviously, we have seen some changes, because Trump was elected president, but that does not mean things have fixed all of a sudden. We need to bear in mind is that the market has been very good recently, but it can be turned around quickly.

Investors are still faced with what individual investors NATIXIS 2015 global survey refers to the “significant planning gap”, has the potential to investors “with a solid foundation for the need to reconcile the desire and return on investment they lingering aversion to risk. ”

The survey found that 69% of investors no longer believe in the traditional portfolio of stocks and bonds is sufficient to generate enough income and capital preservation. This is a problem, because these are the people who pre-retirement and retirement of one of the three main objectives:

• In order to have growth;
• In order to be able to pull income from them. ” It has been saved. and
• in order to be able to practice in a prudent diversification for their own retirement.

“I grew up money, but do not lose it.”

This reminds me of something my father told me I had been with him many years of investment, he said from the beginning:. “I want you to grow my money. I want you to help me from some of its gains. Do not lose it. Do not lose my money. ”

I hear most people who have retired or approaching believe, small speech in some versions. The problem is, when everything is slow, low or dangerous, how do you the development of your money even if it is a little bit where is it going to come from

Traditionally, this is the stock market play the role;?? it has been a cornerstone of the portfolio of every investor’s many consultants and most large companies. , or will tell you that the long-term diversification of the market, you should be fine. However, the global economic growthHas declined in the past two years, there are few signs that this trend will reverse in the short term.

Another challenge is that because those lower yields, a retired hindered from investment capacity, boosting revenue. According to experience, how much should you withdraw retirement rule for accounting for 4% per year. In the “4% rule”, created in the early 1990s, though – more than 20 years ago. It has been suggested, it should be “2.8% rule” because bond yields have dropped so low.

Diversify your retirement portfolio third goal, but since the 2008 financial crisis, we have seen, because of their high correlation between trading stocks and bonds. People do not realize, bond funds in the open market like the stock market to do business. They said, “Wait, I own bonds; why would they fall?” This is because the market downturn to increase relevance.

Different types of portfolios

So, how can you work to help offset the market malaise?

It’s time to look beyond the general stock and bond portfolio. Some alternative investments, I think it can be good for a number of retirees include:

• High security for loans or guarantees of senior debt. These are non-investment grade corporate credit extension proposed acquisitions, growth or other commercial purposes. They are the company’s assets as collateral. If the company fails, investors will be repaid first, which makes them not a high-yield bonds or other investments, provided certain growth with less risk. There are a number of different ways investors can invest in, publicly and privately. Of course, if by owning a listed company, providing senior secured loans to complete, stock market investors are basically taking the risk of making these loans related to a particular company. Another option would be similar investor-owned company, it is private. This reduces the relevance and disadvantages of the stock market, but also limits the liquidity of investors, because it can not be immediately sold on the exchange. However, these private companies have an exit strategy, in order to provide liquidity, whether it is to do IPO or a merger with another company may offer shareholders interests.
• Real estate. Create a Not all real estate equal. Good real estate,There are real estate, I will not touch. Based on the need to focus on real estate and the private sector, such as health care sites or grocery chain. Di rectly owns real estate is always an option, but produces a challenge for many investors, such as liquidity, excessive exposure to the market area just a few heavy property taxes, tenants and toilet-related headaches. I prefer to have those who have been diversified across the United States, is based on a need for specific sectors of real estate for private enterprises. Of course, these companies public and private versions. And senior secured debt, there are advantages and disadvantages of each.
• Private. high net worth individuals wish to look at the purchase of private companies, taking into account the development. Since private companies’ actions are determined by management, rather than shareholders, we have more control. We’ve seen a lot of endowments and pension funds to do so; this is what we mean when we say “big smart money.” I usually prefer a diversified portfolio of private enterprises, focusing on a number of departments, rather than a company. The idea is to visit the company, it has been generating revenue, rather than those (ie angel investors and venture capital) private ownership in the early stages. Mature business is private (with respect to the above-mentioned publicly traded) can provide income investors, but equally there is still liquidity risk.

Do not go crazy

Of course, every investment has a professional player, and a negative connection string. The benefits of such alternative investments is that you are likely to see better yields than you would with a traditional bond. Downfall liquidity. You can not force regressed walk in the open market to sell these investments. Turnaround will take time. So, you have to remember how much you have to invest – In general, for most people, does not exceed 20% of the portfolio to 35%.

This is not to say you should not have your money in the market. You just want it to be an appropriate amount. Adhere to the prudent investor rule: 100 minus your age. If you are 60 years old, you should have 40% of your money, because the practice of liquidity of stocks and bonds.

But I always say that Buffett is not sitting at his laptop on his bathrobe Day Trading; he is likely to include not traded to his overall investment holding alternative investments on the open market. This is something you can do, too, and not just stick in your marketFunds and through your fingers.