Alternative Investments Are For Everyone

- even if you don’t believe the hype!

Join now and earn a 330% return! — The crypto craze
Guaranteed fixed income of 15% with almost no risk — The P2P promise
Will I get a 330% return? Perhaps over a short time but it’s VERY unlikely to be consistent. Is P2P lending really almost risk-free? Of course not! That would be the proverbial free lunch! But if I don’t believe the hype, why is my investment portfolio centered around these particular asset classes? Liquidity and diversification respectively. Each topic warrants a full treatment in its own right, but let’s start with a quick overview. And as always, remember this is NOT financial advice!

There are several reasons why it is important to keep some of your portfolio in high liquidity assets. Suddenly you realize that a vacation does not come free. Gas prices are suddenly higher than the price of saffron, which, to be fair, should also be the case when looking at the utility. Or your significant other decides that the house is due for a new project. There are three ways of preparing for such events:

The cartoon approach: keep a money tank full at all times. Pro: you can literally bathe in your wealth, though don’t expect to be any cleaner afterward. Con: inflation will eat up the purchasing power and even when disregarding inflation you still miss out on all the returns (not to mention fun little heart attacks) that come from investing the money.

The liquid portion approach: keep a portion of your portfolio in highly liquid assets. Pro: you have the option to quickly convert that portion of your portfolio to ready cash. Say, in case you decide a money tank was a pretty nifty idea after all. Con: you never know what the value of that portion of your portfolio will be at the time when you need it. Thus, if your money tank cravings come at an unfortunate time, your pool will be…

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