Most of us, at some point in our lives, wish to invest in something, wish to put our hard-worked-for money into an asset that will give us benefits later. We are hoping to get profit from our savings, but banks aren’t very promising, we all know that. We’re looking for alternatives, for other options. I know people who started “playing” on the markets, they’ve learned about trading stocks, forex, binary options and they managed to assess their profits and losses and they’re doing fine-ish. I know people who invested in properties, they bought few small flats and sub rented them and they live from the rent. I also know people who are still waiting for their time, play lotto every week and hope for a big amount at once, fingers cross.
I like the middle way, not too hard, not too soft. I know that some kind of risk must be taken in order to gain, but there must be some secured stoplosess too. I think that’s why I found alternative investment funds interesting. First of all, you don’t invest in one “thing”, but in a fund, which is a “group of things”. So even if one asset goes down, the other two may go up and you are still earning.
Second of all, the people behind those investments want to earn too. They work in teams and share experiences. As Investopedia says “ Most alternative investment assets are held by institutional investors or accredited, high-net-worth individuals because of the complex natures and limited regulations of the investments. Alternative investments include private equity, hedge funds, managed futures, real estate, commodities and derivatives contracts.”
Of course, make sure that you’re not fooled. It’s important to check the accreditation, the risk management strategy, the allocation and risk advice board, the support options and the customer advice and support. When I’ve started reading and learning the subject, few phrases came into my realisation:
Expected tracking error - it’s a statistical loss that may happen in calculations. It’s worth knowing if your investor takes this into account, as the percentage may differ from what they are promising.
Concentration analysis - it’s a risk management strategy when you take expected tracking error into account and spread it within your investing strategy.
Factor exposure - appears when an investor has a strong signal to move forward but according to their liquidity risk policy. It’s, in simple words, when they decide to do the move the assets they manage.
Liquidity risk - that’s the security door, or the watch-out-for issue, as based on what’s written in this chapter is explaining that the investor can’t meet their financial or investment obligations and they are explaining themselves for loosing or taking away your money.
If you want your money to work for you, you have to make sure that they have a comfortable environment. When they’re invested properly, you can sleep well. Be sure, you can :-)
Before I put my money into any kind, even super promising, scheme or fund, I do my research. I want to know what they’re actually investing into, is it a real estate, stocks, cryptocurrency, or gold or something else. What their risk management policies are. What regulations are they subject to. What the out and withdrawal policies are. What is the customer support and customer protection, too. I want to be safe but entrepreneurial at the same time.