[Summary]
Alternative investments such as art, wine, and watches are a means of diversification that have different price movements than stocks. However, it is illiquid and if mishandled can lock up your funds. In this article, we will explain the benefits, risks, and how to incorporate them into your portfolio from a practical perspective.
What is alternative investment?
Conclusion: Investing in assets other than stocks and bonds
One word explanation
Alternative investment = investment targets other than traditional assets
Detailed explanation
Because prices move due to factors different from those in the stock market, Contributes to stabilizing the entire portfolio.
Main features
- Price movements tend to be independent
- Mainly physical assets
- low liquidity
Representative ①: Art investment
Conclusion: Price is determined by supply, demand and valuation
One word explanation
Art investment = investment aiming to increase the value of the work
price factor
- Writer's rating
- rarity
- market trends
Benefits
- resistant to inflation
- Difficult to correlate with stocks
Disadvantages
- It takes time to sell
- There is a risk of authenticity
Representative ②: Wine investment
Conclusion: The aim is to increase the value through aging
One word explanation
Wine investment = Aiming to increase the price of high-quality wine
price factor
- Production volume (vintage)
- preservation state
- brand power
Benefits
- Potential for value to increase over time
- Supply decrease due to consumption
Disadvantages
- Storage cost required
- fake risk
Representative ③: Luxury watch investment
Conclusion: Popular models have assets
One word explanation
Watch investment = Aiming to increase the price of rare models
price factor
- Brand (e.g. limited edition model)
- supply restrictions
- Used market demand
Benefits
- Easy to carry
- Balancing practicality and asset value
Disadvantages
- Market prices fluctuate sharply
- Counterfeit/altered risk
Biggest point to keep in mind: Liquidity risk
Conclusion: You may not be able to sell when you want to sell
One word explanation
Liquidity = Can you buy and sell quickly?
Problem
- no buyer found
- Selling price drops significantly
Comparison with stocks
| assets | Selling speed | price transparency |
|---|---|---|
| stocks | expensive | expensive |
| Alternative | low | low |
How to incorporate it into your portfolio
Conclusion: Be a supporting role, not a main character
Basic rules
- Keep it to 5-15% of the total
- done with surplus funds
- hold on a long-term basis
example
- Stock: 60%
- Bonds: 25%
- Alternate: 10%
- Cash: 5%
How to use it in practice
Conclusion: Have fun and diversify
points
- Limit yourself to areas where you can understand the value
- Focus on real value as well as market price
- Check the sales route in advance
common mistakes
- Make decisions based on hobbies alone
- neglect liquidity
- Too large proportion of total assets
Summary
- Alternative investments have diversification effects
- However, liquidity risk is large
- Use it as part of your portfolio
action steps
- ① Set the investment ratio within 10%
- ② Select a reliable market and storage method
- ③ Decide the sales strategy in advance