5 Alternative approaches to investing

Alternative investment is a class of investment that is not covered by any state regulatory act such as RBI, SEBI, IRDA and PFRDA. Refers to a private investment fund – trust or company.

Here are some alternative approaches to investing that can influence your investment decisions –

You invest to get more money in the end than you started. This means that you are looking for an absolute return: how much you have actually earned is the main focus.

Invest in assets you believe will be good; do not invest in a product just because it is likely to outperform the market. Have your analysis at hand.

When it comes to investments, the return is easy to calculate. Focus on the risk involved with an alternative investment as well. Prepare a list of relevant risks. You need to have a clear idea of ​​the risks involved in your investment, as this will help you make a informed decision.

Also, if something unexpected happens at all, you are more likely to make better decisions if you think about the risks before investing.

Understand what will affect and lead to the return on your investment. As you hold your investment, keep track of the value of your investment.

Constantly check your assumptions about the drivers of return on investment, in case they do not meet your parameters or expectations, consider your investment.

Anything that is not traditional is an alternative. Alternative investing is full of investment ideas that may not be immediately obvious. For example, cryptocurrency.

Continuous learning, research, exploration, study and looking beyond your comfort zone is the key to financial success.

Keeping a mix of assets that is equally good but behaves differently will leave the yield of your portfolio intact and reduce its risk.

Diversification means building a portfolio with very diverse yield drivers and risk parameters, not just different means.

Most of us think that investing in alternative investments is very risky. However, if you want to live a successful and fulfilled life and retire with enough money to enjoy the years of retirement, you need to take calculated risks. This includes the risks in your relationships, the risks in your career and the risks in your investments.

While taking wisely calculated risks is vital to achieving your life goals, remember that taking bad risks and losing them can set you back, sometimes significantly. However, it can help to remember that taking smart risks is as easy as making wise decisions.

A framework for good decision making

I learned a lot in life by observing others and through my personal experiences – both good and bad. Therefore, when I think about taking risks in any area of ​​my life, here are the questions I ask myself:
1. What are the risks? Be honest. Don’t let your emotions stop you from carefully considering all the possible risks. There are landmines here.
2. What are the chances that one of the risks will materialize? Be honest. Use real data whenever you can by researching and talking to others.
3. What are the rewards? Be realistic. Can you really quit your daily job and dedicate ten hours a week to something and earn $ 100,000 a year? (Probably not.)
4. What are the chances for these awards? Be reasonable. Find out how many others have done something similar and how they fared.
5. What other options do I have? Be creative. Don’t limit yourself. Consider all possibilities.
6. Should I make this decision today? Probably not. Take the time you need to explore and explore your options.

Once you’re done answering these six questions, remove the emotions from your decision and ask what your gut is telling you. Also, never forget the risk of a wild card; you don’t know what you don’t know!