How To Start Diversifying With Alternatives

With the availability of new alternative investing platforms, adding alternatives to your portfolio can provide diversification, reduce risk, and open doors to new opportunities. But knowing where to start can be a challenge. In this edition, we’ll guide you through how to dip your toes into the world of alternatives and set yourself up for success.

1. Why Consider Alternative Investments?

Traditional stocks and bonds are staples of most portfolios, but alternative assets can offer additional stability, particularly when markets are volatile. These investments often have low correlation with traditional assets and can act as a hedge.

2. Where to Start with Alternatives

Before jumping in, it’s important to understand the various asset classes within alternatives. Common ones include:

• Real Estate: From crowdfunding platforms to REITs, real estate is a popular first step.

• Private Equity & Venture Capital: Higher risk, but the potential for exponential growth.

• Commodities: Gold, silver, and even agricultural products can act as a safe haven.

• Crypto & Digital Assets: While volatile, digital assets are becoming an increasingly accepted part of a diversified portfolio.

For beginners, real estate and peer-to-peer lending platforms can be more straightforward.

3. What to Look for in Platforms

Choosing the right platform is crucial. Here’s what you need to consider:

• Reputation & Reviews: Look for platforms with a track record of success and positive user reviews.

• Ease of Use: Some platforms cater to experienced investors, while others are more user-friendly.

• Transparency: Ensure the platform clearly outlines fees, potential risks, and historical returns.

• Due Diligence: Platforms that vet their investments thoroughly are a safer bet for those just starting.

Consider platforms like Fundrise (real estate) or LendingClub (peer-to-peer lending) for easy entry points.

4. How Much Should You Start With?

When getting started, it’s best to treat alternative investments as a small portion of your portfolio. A common rule of thumb is:

• 5-15% of your total portfolio should be allocated to alternatives.

Start small—many platforms allow you to invest with as little as $500-$1,000. You can always scale up as you become more comfortable with the asset class.

Adding alternatives to your portfolio doesn’t have to be overwhelming. By starting with a small allocation, choosing reliable platforms, and understanding the types of assets available, you can open new doors for growth and stability. Ready to take the next step?