The benefits of investing in alternatives: art, gold and commodities

The traditional investment portfolio often consists of stocks and bonds. But there is more! In this blog, we discuss the benefits of investing in alternatives, with a focus on art, gold and commodities.

Why alternatives?

Investing in alternatives offers several advantages:

  • Diversification: Alternatives often have a low correlation with stocks and bonds. This means they can help your portfolio reduce risk and optimize returns.
  • Inflation protection: Some alternatives, such as gold and commodities, are seen as good protection against inflation.
  • Diversification: By investing in alternatives, you expand your investment universe and reduce dependence on traditional asset classes.

Art

Art is an asset class with a long history. Investing in art can give you attractive returns, but it is important to know what you are getting into.

  • Advantages:
    • Potentially high returns: Works of art can increase in value, especially if they are works by well-known or emerging artists.
    • Emotional value: Art can also give you pleasure and satisfaction.
  • Disadvantages:
    • Illiquidity: It can be difficult to sell artwork, especially if you are not familiar with the market.
    • High entry cost: Works of art can be expensive, making investing in art not accessible to everyone.
    • Expertise required: To successfully invest in art, knowledge of the market and artists is important.

Gold

Gold has been considered a safe haven for investors for centuries. The precious metal has a low correlation with other asset classes and is often seen as a protection against inflation.

  • Advantages:
    • Safe haven: Gold is seen as a safe investment in uncertain times.
    • Inflation protection: The value of gold often rises with inflation.
    • Global investment: Gold is a globally recognized investment asset.
  • Disadvantages:
    • No interest income: Gold does not generate interest income.
    • Price volatility: The price of gold may fluctuate in the short term.
    • Storage costs: You need to store gold safely, which incurs additional costs.

Raw materials

Commodities are the basic materials for the global economy. Think of oil, gas, metals and agricultural products. Investing in commodities can give you attractive returns, but it is important to know that these investments can be risky.

  • Advantages:
    • Potentially high returns: Commodity prices can rise sharply, especially when certain commodities are in short supply.
    • Inflation protection: Commodities are often seen as good protection against inflation.
    • Diversification: Commodities have a low correlation with other asset classes.
  • Disadvantages:
    • Price volatility: Commodity prices can fluctuate widely in the short term.
    • Cyclical sensitivity: Demand for commodities is sensitive to the economic cycle.
    • Complexity: Investing in commodities can be complex because of the various factors that influence prices.

Investing in alternatives can diversify your portfolio and optimize your returns. However, always do your own research and only invest with money you can afford to lose. Buro philip van den hurk will be happy to help you assess the suitability of alternatives for your investment portfolio.