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Types of Alternative InvestmentsThere are many types of alternative investments available to the sophisticated investor.

Investors are more likely to explore the many types of alternative investments when traditional investments, like stocks and bonds, are not performing as well. However, even when the stock market is growing, there are many types of alternative investments that are worth considering.

There are many types of alternative investments in a variety of different industries and commodities. Alternative investments can be made in high value items like gold and silver, in collectible items like postage stamps, and even in luxury items like high-end watches and jewelry. Only one of the many types of alternative investments, however, provides investors with a unique opportunity: oil and gas joint ventures and direct partnerships.Types of Alternative Investments

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There are drawbacks to investing in precious metals like gold and silver; some experts do not even consider this type of alternative investment a true investment, since there is no ability to finance the purchase and leverage your wealth and no tax advantages. There is no real income potential with investments in precious metals, either, and the value of gold and silver can be manipulated by governments attempting to revalue their paper currencies. Many of these same disadvantages – the inability to finance the investment, the lack of tax benefits, and the relative lack of liquidity – also apply to other types of alternative investments such as investments in collectibles like postage stamps and in luxury items like watches and jewelry.

Of all the different types of alternative investments available, only oil and gas investments through joint ventures and direct partnerships offer a combination of cash flow and tax incentives that make them rise above other types of alternative investments. In fact, oil and gas investments are become one of the most serious alternative investments for serious investors to investigate, not only because of the potential return on investment but also because of the allowable deductions that can be used to offset income from other sources as well as from the revenues generated by successful wells.

Even though many countries are attempting to reduce their reliance on oil and gas, the problem remains that no viable alternative energy source  – wind, solar, water, nuclear, etc. -  provides a sufficient enough supply to completely replace the need for oil and gas. In fact, the global demand for oil and gas is predicted to continue rising as countries like China and India reach their fully industrialized potential.

When considering the types of alternative investments that are best for your portfolio, many of the factors depend on your capability to handle the risk involved. To invest in oil and gas partnerships and joint ventures, you must be an accredited investor with a net worth of one million dollars or more, or an annual income of $200,000 as an individual or $300,000 as a married couple. These requirements are to prevent those who are not capable of sustaining the investment from taking the risk. If you are an accredited investor looking to diversify and strengthen your portfolio by seeking out different types of alternative investments, oil and gas investing may be the right choice.

 

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