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Avoiding Stock Market Volatility With Alternative Investments

Avoiding Stock Market Volatility With Alternative Investments

Stock market volatility can’t be avoided forever. When a new, shaky market comes around, many investors may panic, sell too many securities, and lose money.

If this has happened to you, you might want to know how to possibly avoid stock market volatility from affecting your portfolio.

Even though you can’t predict the market with perfect accuracy, you can potentially weather volatility more readily through alternative investments.

Today, let’s break down what alternative investments are, how they work, and how they may help you avoid stock market volatility by diversifying your portfolio.


Alternative Investments Explained

Alternative investments are any financial assets that don’t fall into “traditional” investment types or categories. For example, traditional investment categories include cash, stocks, or bonds.

Alternative investments represent different opportunities for investors to use their money wisely. When invested properly, alternative investments could possibly help individuals with effects of market volatility.


Examples of Alternative Investments

Alternative investments come in a variety of types. Some of the most common alternative investments include:

  • Real Estate;
  • Hedge Funds;
  • Venture capital or private equity;
  • Tangible assets such as gold, silver, and other precious metals;
  • Commodities, such as foodstuffs or oil;
  • Illiquid credit;
  • Any liquid alternatives, including mutual funds or exchange-traded funds.

Because alternative investments are less intuitive than stocks or bonds, many investors fail to take advantage of them. However, alternative investments are not that different from traditional investment vehicles/assets. In addition, some alternative investments, like real estate, are more tangible than stocks.