The ability to understand finance in relation to balance sheets and running a successful business may skew the beliefs of entrepreneurs, business leaders and high net worth individuals into thinking that investment strategies are not difficult to get right.
The problem with this is that whatever experience an individual has in running a business and understanding the financial realities it doesn’t always translate to the field of investments, particularly retirement investments.
For many there can be some comfort in the more traditional retirement investment options, such as a defined benefit or defined contribution plan.
These can be perfectly good vehicles for developing funds for a pension on retirement, but for those looking for alternative ways of investing for retirement there are alternative ways to invest funds with the potential for good returns, always bearing in mind that an investment in something alternative could turn out to be a friend or, worst case scenario, an enemy.
The investment seesaw
Anyone with a basic understanding of finance knows that investments can go down as well as up in terms of their value over an extended period. Luck as well as judgment plays a part in investment decisions – who’s to know if a company might suddenly go bust and its shares become worthless just when a significant individual or business investment has been made? Due diligence will have been carried out but there can often be hidden problems that only emerge later.
Everyone wants to mitigate their exposure to retirement investment risk – although entrepreneurs and their ilk are generally not that risk aversive or they wouldn’t have embarked on their particular business activities, but nobody wants to lose a significant amount of their retirement investment portfolio which is why you should really understand the basics yourself as well. A good place to learn about investments is the course “Crisis Investing”, you can find a solid and informative review at Jeff’s Full Review here.
Before looking into alternative investments it’s worth asking for advice from a seasoned financial professional. As an example, Fisher Investments, with successful finance expert Ken Fisher at the helm, can offer a wide range of investment options to consider, and the company’s 99 Tips offers many detailed insights into retirement investment options. From self-directed IRAs – Independent Retirement Accounts that can be managed by the individual investor with professional support where required – to alternatives that avoid the stock market (and its ups and downs following global economic trends and crises) there are areas of investment that could prove to be good ways to invest for the future.
Start-ups and private companies
Angel investing is when an investor makes direct investments into business start-ups or private businesses rather than using a private equity fund to invest in (that will do the same thing but is likely to give lower returns if things go well). This type of investment is high risk, as start-ups can end up failing completely, however, very often such enterprises take off and the return on the initial investment can be huge. It’s essential to do good research before investing in either a start-up or a private company to determine whether there is a realistic chance of them doing well.
As the term suggests this is investment at the early stage of companies as well as their growth stage. It’s effectively taking a gamble on an idea and business plan and providing finance to companies that can’t access the traditional forms of finance, as they have no track record either operationally or in terms of revenue history. Risky? Yes. Potentially very lucrative in the longer term? Yes. Think Google, Twitter and Facebook, where early investors made significant returns on their investments.
Buying and owning land or property, or investing in a company that has these types of assets, can be a good way to develop retirement investment funds. Investors in a position to buy real estate, whether agricultural or residential have opportunities to see good returns on their investments provided they are researched well and then managed properly. Real estate is not always the easiest investment from which to get a good return, but careful management of owned real estate or judicious investment into companies that specialize in this area can bring significant dividends in the future.
Other asset-based investments could include luxury and collectible goods such as wine, rare coins, art and jewelry. Or buying gold as an investment. This is where expert knowledge and advice is essential, and these would usually be long-term investments.
Friend or foe?
Investing, when done carefully and knowing what the risks are, can provide excellent returns for retirement. One can be imaginative but also play safe where necessary so there will always be money to be accessed in later years.