Exotic Types of Investments
- Benefit from the many types of exotic or nontraditional investments.stock exchange and bank notes image by Warren Millar from Fotolia.com
When considering options to grow his money, an investor may choose from a variety of different methods. In most instances, traditional types of investments, such as stocks, bonds and treasury bills, are the route taken. There are many investors, however, who are open to nontraditional types of investments, also called exotic investments. Although the acquisition of these assets often comes with high risk, exotic investments also often come with cache, because they are comprised of foreign industries and "sexy" products, and can also be quite lucrative. - Although many collectors acquire art simply for its aesthetic value, many savvy investors looking to diversify their portfolios have discovered that money can be made from these collections. This exotic type of investment is not for the faint of heart. In fact, unlike the stock market, there is no formal "art market." Coupled with the fact that some art may never appreciate, this can make art collecting a high-risk activity.
Collecting art for investment purposes is a long-term strategy. In addition to the cost of the artwork itself, commissions must be paid to dealers. It is common for these fees to equal up to 25 percent of the purchase price. Those looking to enter this market would be best served by visiting a reputable art show, art dealer, or auction house, such as Sotheby's or Christie's. - The term "emerging markets" is defined by financial website Investorwords as a "financial market of a developing country, usually a small market with a short operating history." These nations include India, Brazil, South Africa, and China. An investor looking to include emerging markets in their financial portfolio may do so in a couple of different ways.
The first, most complicated way, is to independently research companies within these countries. Once a suitable investment has been identified, an investor may then contact the organization and negotiate a price to purchase all or part of it. An easier alternative to this method is to buy into a mutual fund or equity traded fund that includes the stocks of emerging market companies. - Many investors choose to invest in hedge funds as a means to diversify their portfolio. A hedge fund is defined by Investopia as "an aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short, and derivative positions in both domestic and international markets with the goal of generating high returns." It should be noted, however, that hedge funds typically have a high level of risk. In addition, this type of investment usually requires a large amount of capital to participate. It is not uncommon for funds to demand an initial investment of $1 million or more.
