Managing risk and reward in your alternative investment portfolio

Managing risk and reward in your alternative investment portfolio

Despite the growth in interest and the market as a whole, some investors are still wary about putting their money behind an alternative investment, no matter how attractive the proposition may be.

Perhaps it’s the word ‘alternative’ that puts people off. The truth is though that any and every investment opportunity carries some degree of risk, whether alternative or more mainstream. People who make the right moves and thoroughly research a diverse alternative investment portfolio are far more likely to profit than somebody who blindly invests in mainstream stocks, for instance.

The alternative investment market (AIM) is worth £95 billion today with the AIM all-share index out-performing the FTSE 100 and 250 in 2017 alone. UK AIM companies have also created 430,000 jobs and contribute £15 billion to the UK’s GDP.

The market continues to grow at an astonishing rate too, attracting investors from all backgrounds as they look to capitalise on the opportunities that alternatives could provide them. Those who identify the right opportunities and do their research can also build a unique, bespoke alternative investment portfolio that supports their lifestyle, improves their finances and opens them up to new ventures.

The earlier that people consider the alternative investment scene too, the more time and opportunity they have to dabble in and discover new ways to grow their savings, whether it be through a fixed term solution or other financial opening.

Managing risk potential with the right alternative investment strategy

With interest rates so low for the best part of a decade, it’s been a tough time for savers in the UK who want to grow their cash. The recent rate rise by the Bank of England to 0.5% has been welcomed by some, but for many others it’s still not enough, especially with inflation still relatively high in contrast.

Alternatives could help to fill the gap. Consider saving for a child’s future; putting some money aside regularly in their younger years can be a fantastic way to pay for university fees years down the line, help them buy their first home and even work towards their pension.

Again though, by doing some research and playing the investment game properly (as it where), that nest egg could grow larger by considering some of the opportunities alternatives can provide. That naturally gives a larger window for the future to greater assess markets and the risk they hold, while putting some of that extra capital into entirely new ventures.

At the end of October, a report from the Financial Conduct Authority (FCA) suggested that the mean amount of cash savings held by 25 to 34-year-olds is £11,000. At the same time the report says that one in five (19%) of 25 to 34-year-olds have no cash savings at all while 30% have cash savings of less than £1,000.

That leaves them with very little room to manoeuvre financially when they’re looking to grow their savings – certainly, it means there is less appetite to experiment. The earlier people start perusing the alternatives market, the greater their chance of building a diverse investment portfolio that better allows them to manage their risk and reward potential.

FJP Investments is dedicated to working with investors looking to explore the alternative investment market, helping them to research, identify opportunities and build a bespoke financial portfolio that works for them.

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