Alternative Lifestyles: What You Need to Know about Managing Your Wealth with Hedge Funds, Commodities, and Other Alternative Asset Classes

Alternative Lifestyles: What You Need to Know about Managing Your Wealth with Hedge Funds, Commodities, and Other Alternative Asset Classes

It takes creativity and risk-taking to build a fortune or a lucrative career. The wealthy have generally developed rare, in-demand talents and sensibilities that make them invaluable to employers and clients – the type of abilities that allow them to command premium salaries and fees.

All that said, it’s remarkable how straightforward the steps are in reaching the first rungs on the ladder to wealth. Despite the sector or industry that achievers work in, they will invariably find themselves returning to the same key tenets in explaining how they got ahead financially.

The Building Blocks of Starting Out in Personal Finance

Many people overthink personal finance, but many of the steps are quite simple. To start, save as much of your income as you can – at the very least, 15 percent and more if you can manage. Squirrel as much as possible away into tax-advantaged accounts like 401ks and IRAs.

Next, live below your means. I’ve seen many people late in their careers who earn 7 figures per year, but still don’t have enough savings to retire for two years. Living below your means is critical for success.

As a successful professional, you probably understand the value of investing in yourself and your professional development.

Finally, invest in a broadly diversified portfolio of assets that fits your risk tolerance.

All of these are solid tidbits of advice. But they’re of decreasing importance as your portfolio swells and you join the ranks of the truly wealthy.

The perverse, unintended consequence of success is that it can breed complacency. Too many of us overlearn the lessons of building wealth in these earlier stages of our careers. We become used to a “set it and forget it” mindset in which we pay minimal attention to our portfolio and stay the course with a “vanilla” portfolio of blue chip stocks and predictable bonds.

Just as you considered a range of alternatives in tackling your career and business challenges, you should also be open to considering a range of alternatives in asset classes.

Alternative Assets to Consider

Here are a few options that you might want to consider, even if they haven’t played a major role in your portfolio’s growth until now.

• Hedge funds –They’ve taken on a bad rap in the wake of the Wall Street meltdown and Great Recession. Americans have increasingly been preconditioned by our leaders and the media to distrust exotic financial instruments. While skepticism is a safe attitude when considering where to park your money, don’t entirely overlook the opportunities in these assets. It is true that they often charge higher fees than other investment options and pose greater risks – but that volatility is precisely what offers the opportunity for increased gains.
• Private equity – By investing in non-public companies, you’ll gain access to opportunities the average investor can’t find in the stock market. Your participation can also offer exponentially higher gains because of the larger role that private equity investors play in promoting expansion of newer businesses. The costs of entry can be burdensome, limiting this as an option for nearly everyone but wealthier investors

Your wealth strategy is unique to your own aspirations and values – and that means that you may have to leverage tools that are seldom used by others. Make sure that you don’t discount the power of some of these alternative asset classes before thoroughly researching them and discussing with your wealth advisor.

To learn more read Exceptional Wealth. Claim your free copy here.