Six Noteworthy Alternative Investment Options to Incorporate in Your Estate Strategy

Six Noteworthy Alternative Investment Options to Incorporate in Your Estate Strategy

Laying the Legacy Foundation: Beyond Stocks and Bonds

For the wealthy family, creating a lasting legacy is about more than just leaving assets behind. It's about shaping a financial strategy that aligns with one's values, ambitions, and resilience for generations to come. To do this, alternative investments such as private equity, real estate, hedge funds, fine art, collectibles, and commodities can be a game-changer.

Alternative investments offer an assortment of benefits that traditional assets might not, including helping to reduce volatility, diversify portfolios, and support long-term growth – all of which often align with the multi-generational objectives of wealth preservation. However, these investments come with their own unique set of risks and challenges.

Private Equity and Real Estate: Building a Lasting Impact

Investing in private companies, whether start-ups or established firms, can offer higher returns than publicly-traded options. Private equity (PE) can be the preferred choice for those looking to build long-term influence or support local communities, making a significant impact alongside attractive returns.

Real estate transcends mere properties; it can include rental and commercial complexes, farmland, and vacation homes passed down through generations. The monetary components of real estate, which include appreciation and rental income, along with potential tax advantages, make it an appealing asset for those aiming to safeguard and grow their wealth.

Hedge Funds: Protecting Your Wealth

Hedge funds, investment vehicles for high-net-worth individuals, provide access to sophisticated investment strategies that shield capital and promote growth in all market conditions. By diversifying portfolios and offering downside protection, hedge funds help preserve wealth and deliver returns that outperform the market.

Fine Art and Commodities: A Store of Value and Diversification

Art is not only aesthetically pleasing but also serves as a store of value. For families with a passion for culture or history, acquiring art can reflect their interests while demonstrating their wealth. Furthermore, certain commodities such as gold, oil, and wheat can offer protection against inflation, currency fluctuations, and economic shifts.

Collectibles: Hobbies Turned Investments

Expensive hobbies can become valuable investments. Asset classes like vintage wines, classic cars, and luxury watches present opportunities to diversify portfolios and pass on keepsakes with emotional significance across generations.

While alternative investments can enhance a legacy plan, it's crucial to work with a financial advisor who understands your long-term goals and can help navigate the complexities inherent in these investments. Above all, taking the time to educate heirs on these unique assets will ensure their lasting impact and prevent any potential conflicts that might arise during wealth transfer.

References:

1. Wealthspire Advisors (2021): Alternative Investments: Beyond the Basics
2. Investopedia (2021): Alternative Investments
3. Forbes (2019): Why Alternative Investments Are Crucial For Preserving Family Wealth
4. Morningstar (2021): Liquidity and Alternative Investments
5. Wall Street Journal (2021): 5 Smart Strategies for Alternative Investing
6. The assortment of benefits provided by private equity includes the opportunity for higher returns and the ability to build long-term influence or support local communities, making a significant impact alongside attractive returns.
7. Real estate investments can include a variety of properties like rental and commercial complexes, farmland, and vacation homes passed down through generations, offering monetary components such as appreciation, rental income, and potential tax advantages.
8. Hedge funds offer access to sophisticated investment strategies that shield capital and promote growth in all market conditions, providing downside protection and diversification to help preserve wealth and deliver returns that outperform the market.
9. While Fine Art and certain commodities like gold, oil, and wheat can offer protection against inflation, currency fluctuations, and economic shifts, they also serve as a store of value for families with a passion for culture or history.

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