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5 Smart Alternative Investment Options for Investors in 2022

Anusree Bhattacharya | February 16, 2022 | 72 views

5_Smart_Alternative
Investing has always been challenging—especially in an economic shift due to crises or pandemics. Nevertheless, investing in bonds, stocks, gold, and mutual funds hasbeen atthe top of the list for most financiers, CFOs, companies, and other financial bodies. Thesehave been some of the safest and most profit-driven investment options for decades.

Despite all these investment options, investors are frequently discouragedbythe warnings aboutnot diversifying their portfolios. This iswhere alternative investment opportunities come in. It is another interesting investment asset category that exists beyond traditional investment options.

If CFOs andbusinesses arelooking forward to diversifyingtheir investment portfolio, then they must consider alternative investment assetsin detail. Alternative investments represent diversification and often act as a buffer against volatility in trading.  

Therefore, when it comes to making decisions over investing in an alternative asset that could be advantageousfor the portfolio, the following must be considered:

  • Liquidity of assets
  • Budget-friendly
  • Investing time horizon
  • Passions

When deciding about alternative places to invest in, prioritizing these considerations will protect you from falling into scams and get-rich-quickly schemes. Instead, alternative assets will focus on legitimate investment schemes to prosper.

So, if CFOs and companies are looking for the best alternative investment options in 2022, this article has selected five types of legitimate alternative investment options predicted to prosper capital in 2022.

Top Five Alternative Investment Options to Consider in 2022

 

Small Businesses/Start-ups

Small businesses or start-ups are one of the best alternative investmentoption. Ithas the potential to produce the highest returns on capital invested. However, some companies or start-ups may have sluggish growth in valuation and revenue, but investing in them will probably get you steady income after some time.

As businesses are adapting to the virtual platform, the return on investment can be even more profitable than the cost reduction in business infrastructure. These include consulting, IT, digital, educational institutions, and others.

The best way to invest in small businesses or start-ups is by investing a small share of capital into a particular business segment. It could be in partnership, becoming a shareholder, stakeholder, or financer. In the future, this approach could save you from some sleepless nights. This will help you to create a legitimate alternative assetwiththe desired returns in the end.

Cryptocurrency

Since 2020, the cryptocurrency market has had a profitable valuation and is now becoming a prospering source of investment. As a result, cryptocurrency is being adopted widely and is becoming increasingly favorableas an alternative investment option.

Cryptocurrency has the potential to create a robust investment strategy that could last far into the future. Crypto-based investments and returns will vary depending on how you choose to invest in cryptocurrency. One way to go forward with investing in cryptocurrency as an alternative investment option is to buy the stocks of a company that deals in blockchain technology or in firms that mine cryptocurrency. Another way is by investing in cryptocurrency as an underlying asset. This includes Bitcoin and Ether futures trade on the CME.

To emphasize,blockchain-based technologies are essential because they are getting wider acceptance as alternative investments. For example, in May 2021, Goldman Sachs declared Bitcoin and other digital currencies a separate alternative asset category for their current and potential investors.Therefore, having crypto-based alternatives in your portfolio depends on your risk-taking capacity and a strategic approach with transparent goals.

Private Equity

Capital investment in private companies or public exchange bodies like the New York Stock Exchange intensifies alternative investment options. If you are planning to focus on investing in private equity, then there are some subsets that you must consider. These are as follows:

  • Venture capital (focusing on start-ups and early-stage ventures)
  • Growth capital (focuses on mature companies)
  • Buyouts

The best part about private equity companies is that they often provide more capital to the firms they invest in. For example, Cruise Automation is known for developing self-driving vehicle technology. It was developed through equity funding, and later on, General Motors acquired it in 2019 and turned out to be profitable for investors. Hence, it’s evident that private equity is also one of the best alternative investment options to get returns in the future.

Real Estate Investment Trusts (REITs)

REITs are part of a company that owns and manages real estate on behalf of a group of investors looking to earn capital. Due to its legal structure, REIT is gaining popularity among other alternative investment options.Corporate tax is not payable on the rental income earned from properties under RETIs. Instead, only shareholders pay those taxes. That’s one of the best benefits of choosing REITs for your portfolio of alternative investments.

You also get the opportunity to purchase REITs on the stock market,similarly to how you do for other companies or equity. Dividend paying REITs may be the best option if you want a consistent income from your investment. You might also consider non-market-listed REITs from private companies like Streetwise, a real estate investing company. The company has a stellar track record of public REIT dividend payments. The company leverages the best-performing property investments into professionally designed portfolios.

Therefore, investing in REITs is profitable at low effort and is a long-term income strategy. That being said, you’ll need some time to analyze various companies that invest in real estate, and could beprofitable in the long run. On the contrary, the risk could be that if you are not aware of the procedure to invest in this alternative option, you might lose money. It’s said thatstocks and prices of REITs can fluctuate in a short time and may cause volatility in your portfolio.

Peer-to-Peer Lending

Peer-to-peer lending continues to grow as a secured alternative investments option after legacy investment options before. But still the new ones are termed to be expensive investment opportunities. This investment option is as simple as it sounds.It involves investing capital on a platform that lets others borrow money. In this process, your money is paid back in small investments with your original cash at a profitable interest rate.

While peer-to-peer lending is a valuable investment option, it is advisable to be cautious abouthow you go about allocating your loanable funds under P2P lending investment. If you are considering it, check for a trusted lending platformto faithfully manage your alternative investment funds.


What’s Driving the Surge in Activity in 2022?


Technology

Technology expansion is happening across different sectors and markets. The financial industry is one of them, leveraging technology to offer sustainable investment funds similar to alternatives. Back in 2015, most financial companies were limited to the SaaS (software as a service) and mobile space. These days, technologies like blockchain, data analytics, machine learning, automation, and AI are creating innumerable opportunities in finance than ever before. As a result, financial businesses are modifying their technology base in an effort to remain focused on long-term growth objectives and stay ahead of the curve.

“As data and technology continue to play an increasingly important role in investment decision-making, the methods used to extract value fromboth structured and unstructured data will becomeincreasinglymore sophisticated.”

GARY BROUGHTON, Head of DataScience, Preqin


How financial managers are benefitting from the use of technology in their operations:

  • Fundraising                    - 45%
  • Portfolio management   - 51%
  • Investments                  - 53%
  • Fund operations            - 62%


Rising Capital Valuation

Today, numerous financial companies are raising more capital at higher valuations. A study by Deloitte shows that emerging financial markets will account for more than 50% of total growth in GDP in the next twenty years. As a result, the market is likely to account for more than 50% of alternative asset growth.

“As the industry has continued to grow, wehave seen a rise in the source of capitalfrom funds of funds. Companies have become moresophisticated and looking forward to making moredirect fund commitments to reduce their costbase and manage their portfolios.”

GIANLUCA D’ANGELO, Head of EMEA, Eaton Partners

Investing in stocks and bonds should never be the only investment option to consider. However, if you want to increase or diversify your rewards, then considering the above alternative investment options will help boost your capital venture and portfolio in 2022.

In fact, alternative investments offer superior portfolio diversification and diminish overall risks. Another benefit of alternative investment is thepotential for higher returns to be earned. So, before you invest, it is advisable to thoroughly evaluate the options available.


Frequently Asked Questions


Why should you invest in alternative investments?

Alternative investments provide an opportunity for reducing investment risks, improving portfolios, and more as an independent body. It has fewer associations than conventional assets and offers higher returns.


How much should an investor invest in alternative funds?

An expert investor mainly invests around 15%-20% of their portfolio in alternative assets as a low-risk investment. For high-risk investors, the allocation of investments is around 5%-10%.


Why should you add alternatives to your portfolio?

Adding alternatives to your portfolio helps diversify assets and reduce volatilityin your profile. Also, alternatives make your portfolios stable and offer opportunities to invest more in the future.

Spotlight

Empower Retirement

At Great-West Financial® and Empower Retirement, our more than 5,700 associates are dedicated to helping millions of Americans plan for their financial futures. Headquartered in metro Denver, we serve customers nationwide through offices around the country. Our offerings range from life insurance, annuities and executive benefits products marketed under our Great-West brand to retirement savings products and services provided by our Empower brand.

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NOYACK Logistics Income (NLI) Started Accepting Cryptocurrency Payments with Partnership with BitPay

NOYACK | March 21, 2022

NOYACK Logistics Income (NLI) is now accepting cryptocurrency payments for share with the partnership with BitPay. NLI is sponsored by NOYACK Capital and for investing in supply chain real estate. The partnership has made NLI the first-ever REIT to accept cryptocurrency and enables investors to fund their commitment with Bitcoin (BTC), Wrapped Bitcoin (WBTC), Dogecoin (DOGE), and Litecoin (LTC). In addition, investors can also use Ethereum (ETH), Bitcoin Cash (BCH), ShibaInu (SHIB), and five USD-pegged stablecoins (BUSD, DAI, GUSD, USDC, and USDP) for payments. NLI is the first REIT to partner with BitPay, a leading crypto payment service provider and one of the initial alternative investment offerings that enable investors to convert digital cryptocurrency into ownership of a hard asset seamlessly. This partnership is a critical way to connect with today's investors to include investment real estate and cryptocurrency in their retirement accounts. NOYACK's BitPay payment integration is one of the pioneering initiatives for structured commercial real estate investment. Investors can now divide investment between traditional and cryptocurrency. They can easily select their preferred wallet or exchange, select a cryptocurrency, scan a QR code or manually enter payment details. Interestingly, they can easily do it through their mobile devices. CJ Follini, CEO of NOYACK Capital. This is another example of moving crypto mainstream. More investors are asking to move cryptocurrency allocations into physical assets like real estate. This ability puts Noyack at the forefront of alternative investment management. The market potential for crypto adoption bridging into the physical world is huge. We estimate $55 Billion in purchases and investments using cryptocurrency in the next 12 months." Stephen Pair, CEO of BitPay. Therefore, bbeingNOYACK's proprietary analytics and market research, NLI will further identify properties serving emerging needs for autonomous vehicle infrastructure, climate-controlled storage, same-day delivery, and solving other rapidly evolving uses.

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PAYMENTS

EVODeFi comes out with its new payment solution EVODeFi.Pay

EVODeFi | March 21, 2022

EVODeFi cross-chain solution just unveiled its new product – EVODeFi.Pay. This is a powerful tool for making crypto payments, allowing sellers to accept and bill cryptocurrency to customers with minimal time and effort. The product will be especially valuable for users who want to perform their money transactions in cryptocurrency without using complicated schemes. The high-tech system of EVODeFi provides numerous crypto services including business tools to increase crypto payments, a bridge between networks, and a high-tech system to work with crypto exchange and crypto-salaries. A professional team that has already launched one of the top 5 bridges created EVODeFi.Pay that facilitates the process of exchanging cryptocurrency between sellers and buyers. EVODeFi.Pay is a product that performs fast crypto-transactions between vendors and customers. The process of using the service is extremely simple: a buyer chooses the cryptocurrency which he or she wants and pays for the purchase. EVODeFi.Pay converts one cryptocurrency into another and sends the payment to a seller in the crypto that has been chosen. Since many have refused to use BTC/ETH in favor of faster networks, EVODeFi.Pay can offer several popular networks, such as BSC, Fantom, Avax, Polygon, which already have a large number of users. In addition, the development team uses a powerful security system to protect transactions at all stages. Moreover, convenient localization and the ability to use the service on any device will greatly facilitate integration. About EVODeFi: EVODeFi is a cross-chain solution providing a set of crypto products including a bridge between networks, business tools to increase crypto payments, and a high-tech system to work with crypto exchange and crypto-salaries projects, available in a single system. EVODeFi develops the following services: Bridge, Pay, Exchange, Payroll and App. Using the latest technologies and great experience, the EVODeFi system works at the international level, providing its services in regions around the world, for example in the USA, Europe, and South America.

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FINANCIAL MANAGEMENT

MO Technologies Chooses Esri's ArcGIS Platform to Support Alternative Credit Scoring Tool

MO Technologies | March 22, 2022

MO Technologies, which offers financial technology (fintech) companies a more complete view of a person's creditworthiness through location intelligence, has adopted Esri's ArcGIS Platform to provide the precise, frequently updated data at the core of MO's tools used to complement traditional credit scoring models. Understanding that the financial life of a person doesn't always fit the mold used by credit scoring bureaus and banks, leaders at MO believe knowing more about where a person lives and works can help fill in gaps and warrant extending credit to some of the hundreds of millions of people left out of the financial system. Situations can change dramatically, as we've seen in the last two years, It's important to account for evolving characteristics in a location where a credit applicant lives. Placing data in a geographic context offers valuable insights and crucial understanding." Javier Díaz-Cely, MO's chief analytics officer. Central to MO's software as a solution (SaaS) offerings—including its latest product, MO Geo—is reliable information from Esri, the global leader in location intelligence. By adopting ArcGIS Platform, Esri's platform as a service (PaaS), MO unlocked access to Esri's rich demographic data and precision geocoding services. We're excited MO turned to ArcGIS Platform when the company needed reliable data and geocoding, By offering flexible solutions, we allow our customers to focus on what they do best." David Cardella, Esri product manager for developer technologies. MO uses data about housing prices, the cost of food, access to transportation and public utilities, and more, to create models that can help estimate what a person's income or financial risk might be. MO's team discovered that in Argentina, for example, the distance between a person's home and an ATM is a significant factor. In Mexico, it is important to consider home prices and how many grocery stores are in an applicant's vicinity. MO Geo, the company's recently launched stand-alone product, provides fintechs and other financial institutions with geographical indexes—developed through machine learning—that can be used as inputs to complement traditional models. The product also works in tandem with MO Score, the company's own credit scoring platform. Beyond financial institutions, the company has worked with businesses in the gig economy as well as consumer product goods manufacturers that wanted to extend credit to small merchants with little financial history. Based in Bogotá, Colombia, MO has focused its work so far in the Latin America and Caribbean regions. The company's technology has already played a role in one million credit assessments. A free version of the MO Geo solution is being made available in the US. The company is expanding the product's availability to Mexico, Colombia, and the rest of the Latin America and Caribbean regions. About MO Technologies At MO, we are moving technology forward for a more inclusive, digital & seamless financing. We are a SaaS credit tech company covering the E2E digital credit lifecycle management for origination, servicing, and debt collection in a one-stop-shop schema. Our productized solution enables a laser speed launch of your new hyper-personalized product, fully digital and integrated seamlessly with your platforms. We are the right tech partners for Fintechs and traditional issuing players as we enable them to revolutionize the credit industry. About Esri Esri, the global market leader in geographic information system (GIS) software, location intelligence, and mapping, helps customers unlock the full potential of data to improve operational and business results. Founded in 1969 in Redlands, California, USA, Esri software is deployed in more than 350,000 organizations globally and in over 200,000 institutions in the Americas, Asia and the Pacific, Europe, Africa, and the Middle East, including Fortune 500 companies, government agencies, nonprofits, and universities. Esri has regional offices, international distributors, and partners providing local support in over 100 countries on six continents. With its pioneering commitment to geospatial information technology, Esri engineers the most innovative solutions for digital transformation, the Internet of Things (IoT), and advanced analytics.

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BITCOIN AND CRYPTO

NOYACK Logistics Income (NLI) Started Accepting Cryptocurrency Payments with Partnership with BitPay

NOYACK | March 21, 2022

NOYACK Logistics Income (NLI) is now accepting cryptocurrency payments for share with the partnership with BitPay. NLI is sponsored by NOYACK Capital and for investing in supply chain real estate. The partnership has made NLI the first-ever REIT to accept cryptocurrency and enables investors to fund their commitment with Bitcoin (BTC), Wrapped Bitcoin (WBTC), Dogecoin (DOGE), and Litecoin (LTC). In addition, investors can also use Ethereum (ETH), Bitcoin Cash (BCH), ShibaInu (SHIB), and five USD-pegged stablecoins (BUSD, DAI, GUSD, USDC, and USDP) for payments. NLI is the first REIT to partner with BitPay, a leading crypto payment service provider and one of the initial alternative investment offerings that enable investors to convert digital cryptocurrency into ownership of a hard asset seamlessly. This partnership is a critical way to connect with today's investors to include investment real estate and cryptocurrency in their retirement accounts. NOYACK's BitPay payment integration is one of the pioneering initiatives for structured commercial real estate investment. Investors can now divide investment between traditional and cryptocurrency. They can easily select their preferred wallet or exchange, select a cryptocurrency, scan a QR code or manually enter payment details. Interestingly, they can easily do it through their mobile devices. CJ Follini, CEO of NOYACK Capital. This is another example of moving crypto mainstream. More investors are asking to move cryptocurrency allocations into physical assets like real estate. This ability puts Noyack at the forefront of alternative investment management. The market potential for crypto adoption bridging into the physical world is huge. We estimate $55 Billion in purchases and investments using cryptocurrency in the next 12 months." Stephen Pair, CEO of BitPay. Therefore, bbeingNOYACK's proprietary analytics and market research, NLI will further identify properties serving emerging needs for autonomous vehicle infrastructure, climate-controlled storage, same-day delivery, and solving other rapidly evolving uses.

Read More

PAYMENTS

EVODeFi comes out with its new payment solution EVODeFi.Pay

EVODeFi | March 21, 2022

EVODeFi cross-chain solution just unveiled its new product – EVODeFi.Pay. This is a powerful tool for making crypto payments, allowing sellers to accept and bill cryptocurrency to customers with minimal time and effort. The product will be especially valuable for users who want to perform their money transactions in cryptocurrency without using complicated schemes. The high-tech system of EVODeFi provides numerous crypto services including business tools to increase crypto payments, a bridge between networks, and a high-tech system to work with crypto exchange and crypto-salaries. A professional team that has already launched one of the top 5 bridges created EVODeFi.Pay that facilitates the process of exchanging cryptocurrency between sellers and buyers. EVODeFi.Pay is a product that performs fast crypto-transactions between vendors and customers. The process of using the service is extremely simple: a buyer chooses the cryptocurrency which he or she wants and pays for the purchase. EVODeFi.Pay converts one cryptocurrency into another and sends the payment to a seller in the crypto that has been chosen. Since many have refused to use BTC/ETH in favor of faster networks, EVODeFi.Pay can offer several popular networks, such as BSC, Fantom, Avax, Polygon, which already have a large number of users. In addition, the development team uses a powerful security system to protect transactions at all stages. Moreover, convenient localization and the ability to use the service on any device will greatly facilitate integration. About EVODeFi: EVODeFi is a cross-chain solution providing a set of crypto products including a bridge between networks, business tools to increase crypto payments, and a high-tech system to work with crypto exchange and crypto-salaries projects, available in a single system. EVODeFi develops the following services: Bridge, Pay, Exchange, Payroll and App. Using the latest technologies and great experience, the EVODeFi system works at the international level, providing its services in regions around the world, for example in the USA, Europe, and South America.

Read More

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