As investing keeps evolving and more folks jump into the market, many investors look for alternative assets to help shield their portfolios from inflation and market volatility. Can you blame them?

Alternative assets aren’t limited to cryptocurrencies and nonfungible tokens (NFTs). Investments include private equity, infrastructure, farmland, venture capital, real estate and more.

Some of the pros of investing in alternative assets include the following.

• Diversification: Low correlation with stocks and bonds.
• Inflation hedge: Many (like real estate or commodities) can hold value during inflation.
• Potential for higher returns: Especially in private equity or venture capital.
• Unique opportunities: Exposure to markets not available in traditional investments.

But, there are some strong cons to adding alternative assets to your portfolio.

• Illiquidity: Harder to buy/sell quickly (e.g., real estate, private equity).
• Complexity: Often require more research and understanding.
• Higher fees: Management and performance fees can be steep.
• Transparency issues: Harder to evaluate performance or examine underlying holdings.

It’s important to start small, do your homework and get to know the investment inside and out before attempting to invest. Understand the fees, the risks, the liquidity and the people behind the scenes before you put your hard-earned money on the line.

Want to chat with other investors who have already explored this area? We created a new community to house discussions specifically around cryptocurrency and alternative assets.

Log in to the AAII Community homepage using your AAII credentials and join the new AAII Cryptocurrency & Alternative Assets Community to start the conversation.

Join Our Community Today
https://community.aaii.com

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