Fine Art, Lumber, And Auto Finance: Alternative Investing Offers Opportunities To Share The Wealth

[view original post]

Since the 2012 JOBS Act eased funding of startups and small businesses, the field of investors has slowly widened to include people beyond high-net-worth and professional investors. But much more remains to be done to make investing part of the financial lives of a broad swath of Americans. Alternative investing is one effort to democratize an activity that has long been limited to the wealthy and connected.

Alternative investing involves putting money anywhere outside of stocks and bonds, so it’s a huge market with a nearly limitless array of investment options. When people think of alternative assets, many naturally go to real estate, which is the most common alternative asset class, but recent years have seen a boom in investing in illiquid assets like art, collectibles, cryptocurrency, lumber, agriculture, and even auto and legal financing.

One of the more interesting movements over the last 18 months plus is that alt investing is particularly attractive to younger and underserved customers and this is for several reasons. Not only do alternative investments allow investors to have a more personal connection with the things they are investing in, it feels more tangible and therefore there is a different passion for the asset class. Also, alternative investments offer opportunities to capitalize on underfunded assets, they can create a hedge against stock market bets and are increasingly viewed as an essential part of a balanced portfolio. This can be seen across the industry, for example, with the likes of Goldman Sachs GS and JPMorgan JPM offering to hold bitcoin assets for their wealth management clients.

For now, however, investors look to alternative asset specialists such as Yieldstreet*, Cult Wines, Farm Together, LearnVest, VestWell, and beyond to access alternative investments. Yieldstreet alone has funded nearly $1.9 billion in alternative investments on its platform. Yieldstreet CEO Milind Mehere told me recently, “If you’re a traditional investor, or ultra-high net worth individual or family office, your money is working for you while you’re sleeping. That’s the question every consumer needs to ask: Is my money working for me when I’m sleeping?” The concept of autonomous money is an important one. This is money that does the work while you’re doing other things. Most retail investors haven’t internalized this, but this is the principle that drives wealth creation for the world’s most affluent people and with access to technology it is one that the broader population could be adapting to.

Alternative investments offer several potential advantages over traditional investments in cash, stocks, and bonds. One of the most important is that alternative investments are typically not tied to the stock market, which is sensitive to world events such as presidential elections, natural disasters, and tweets from mercurial billionaires. This helps make alternative investments grow in popularity and value during unsettled times that tend to devalue traditional investments. 

MORE FOR YOU

Retail investors can access alternative investments through a number of vehicles, including ETFs and mutual funds. But to put money into the more exotic assets like wine, sneakers, and fine art, investors will need to join a platform that specializes in alt investing.

The promise of fintech has always been that it will make life better for consumers of financial services, particularly those not well served by traditional players. Alt investing does this by bringing investment opportunities to people who would never have had the opportunity just a few years ago. Now, alongside platforms offering fractional shares in stocks, alternative investment platforms offer ordinary Americans the chance to take control of their financial futures by earning passive income and building wealth with just a few dollars and a few clicks.

*YieldStreet is a partner of author