The trick to adding alternative assets to your asset allocation is to utilize a rigorous process. This avoids the scary scenario where you have the wrong assets in your allocation or the wrong weightings on the assets. With the right approach, your treat is getting the optimal asset allocation relative to your risk profile and your needs.
Category: Wealth Strategy
Alternative Reality: Return and Risk
Stocks and bonds are the most common investments in portfolios. They are also the investments that we are the most familiar with and that receive the most media coverage. Yet, as I covered in the “Portfolio Pie” blog, 10% of the investable assets in the world are “alternative” such as commercial real estate and private equity. It is harder for individuals to find information on alternatives as they don’t trade on public markets. To help understand the reality of investing in alternative assets from a portfolio perspective, I look at the main types and how their return and risk has compared to bonds and stocks.
Heavenly Returns: Life Insurance as Fixed Income
I know what you are thinking. Isn’t insurance about getting tax free money when you die, not about investing? For sure that is the primary purpose. However, some life insurance can also be an attractive long term alternative to some fixed income in your portfolio. I recently went through an analysis of converting my term life insurance policy into a new policy. I am no insurance expert. But working with insurance professionals[1] I recognized the heavenly returns that can be available compared to fixed income alternatives.
Sustainable Investing: The ABCs of ESG
Sustainable Investing (SI) is the general term used for considering the environmental, social, and governance (ESG)[1] impact of investing in the securities and assets of governments and corporations. Responsible investing, social investing, or values-based investing are other terms that are often used. Similar to traditional investing, it can be hard to filter SI information to separate the hype from the helpful.
Fair Fee Fare
There is a menu of choices out there for your fee fare. Paying a fair fee for advice and investments is one of the most important aspects of your wealth strategy. It is also part of what inspired me to build my consulting business and name it “Wayfairer”, as I have come across too many people that don’t get fair value for the fees they pay. Fairness is not always about paying the lowest fee. It is about getting valuable advice and services. It is about getting outperformance versus passive investments like low-cost ETFs if you are paying for active management.