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Saturday, March 4, 2017

Alternative investments for retirement – do they act as your pension pot?

Many people today don’t trust pensions, and rather than not know how much they’ll have for retirement, they choose to invest. The choices are endless, although the majority of retirees invest in property. 

Only the most informed take risks; and by risks we mean investing in unconventional assets, such as fine wine, gold, collectibles, and more. Is real estate really one of the safest and most profitable types of investment? Is real estate worth relying on in the last 20-30 years of your life?

In certain areas, property may seem to have incredibly good values. However, as far as buy-to-let is concerned, chances are you’ll fail if you don’t know what the sub-niche involves. The exact same principle applies when investing in fine wine, gold and collectibles. For an alternative type of investment to pay off, the investor has to know the ins and outs of that form of investment. Otherwise he won’t be able to solve unexpected issues, or worse deal with loss. If you’re sure that alternative investing is what you need for retirement, the following examples might help expand your pension pot.


The famous cryptocurrency is one of the newest and most innovative forms of alternative investment. If you believe in the virtual currency and want to invest in its potential, now you can through the Self-Directed IRA – the only individual retirement account that allows investors to buy bitcoins and add them to their retirement portfolios. The process is rather simple. You have to open an account using the SIDRA (self-directed IRA) app; and then add bitcoins to that account. Your account will be funded via transfer or rollover. The last step is to complete a Bitcoin allocation order. Your account should have at least $5,000 and the fee charged upfront is very small; no other charges will be applied to your account.

When investing in the Bitcoin IRA, you have to know very well the rules implied. For example, note that you won’t have access to the money until you reach the age of 59 ½. Even though everyone can buy bitcoins, the Bitcoin IRA has several added benefits related to tax-advantage savings without any hassles.

Peer to peer lending

Also known as social lending, peer-to-peer can benefit both borrowers (who can obtain loans at more affordable rates than in a bank) and lenders (whose ROI can be higher than in a bank). The process is customized, and it the last couple of years it has become extremely popular. However, peer-to-peer lending is not risk free. Considering that there’s no authorized body to manage transactions, there’s a default risk involved. Somehow it can be minimized when selecting more than a single platform from which to borrow cash. Some of the most well-known include Funding Circle, Upstart, SoFi, Pave, Daric, and the Lending Club among numerous others.

Private placement

Private placement means raising capital via unregistered securities offering. Both public and private companies engage in this form of investment to get funds from investors. Private funds such as hedge funds often consider private placements. Often rendered to accredited and institutional investors, non-accredited individuals can also make such investments. In their case, private placements are small businesses, LLC partnerships, land trusts and more. Even though these can be extremely profitable, there are certain risks involved you might want to know more about. Before doing anything, it might be best to consult with a financial advisor to help you settle on the most suitable course of action for your investment plan.

Fine wine

Last but not least, we have fine wine. Contrary to popular belief, investing in fine wine can be extremely profitable. But you have to do it smart. It’s fundamental that you know as much as possible about the industry before spending any money. Get advice from accredited consultants and merchants, check out the best wine websites and blogs for some extra information, and whatever you do, just make sure to stay away from people that sell “rare” wines by the bottle. You may be tempted to that attractive bottleof Chateau Petrus at the most convenient price, but what happens if the wine is spoiled? Or worse, fake?

Alternative assets might seem like the best type of investment, but then again even if they are, you have to steer clear of risk. Sure, it’s ok to be take a chance and try your luck, but this doesn’t mean you should put all your money into a single form of investment and call it quits.

Image: Chris Potter/Flickr, "Education Investing:, CC BY 2.0