- Foreign currency is currency typically not used in the investor’s home country.
- Insurance products include life insurance (such as whole life) and annuities. An annuity is created when a person pays a life insurance premium that will be distributed back to the individual over time.
- Derivatives are financial contracts that get their value from the performance of another asset or interest rate. These contracts may include futures, forwards, and/or options.
- Venture capital is money invested for startups and small businesses that have a growth potential over the long term. It is a high risk, high reward, and usually comes from relatively wealthy investors.
- Private equity consists of investments made privately, and not quoted publicly. Investors make these investments directly into private companies. This capital is generally raised in order to fund new technologies or make acquisitions.
- Distressed securities are from companies going through bankruptcy or near bankruptcy (and we had a lot in 2020). While they are high risk, they are cheap to purchase and may be profitable if the company’s situation is not as dire as the market believes it to be.
Whether you decide to invest in traditional assets, or traditional and alternative assets, diversification is important. By knowing what each of the asset classes are, you will be better equipped to choose the investments that best suit your needs.