In the area of accumulating wealth and securing the future, alternative investments are increasingly becoming a staple among discerning investors. Private equity and real estate to hedge funds and even collectibles are just some of the non-traditional assets that are available, which promise diversification, risk reduction, and higher yields. However, despite their increasing popularity, few people remain apprehensive to even consider them — usually because of misconceptions and investing myths.
In this post, we'll dispel three prominent alternative asset myths and discuss why it may be time to change your approach — if you're seeking start-up investing advice or mapping out long-term wealth expansion.
Years ago, alternative investments were perceived as the domain of billionaires, institutional investors, or those who have high-end financial advisers. The image was that unless you possessed millions, then you're not even in the game.
However, thanks to changing platforms and regulatory changes, no longer the case.
Real estate crowdfunding websites today enable investments as low as $500.
Private credit and private equity solutions are offered through online fintech platforms.
Tokenized assets and cryptocurrencies provide access to previously illiquid asset classes with fractional ownership.
Several of these platforms are retail investor-oriented with user-friendly dashboards, automated rebalancing tools, and transparent fees. Even regulatory agencies like the SEC have broadened the definition of "accredited investors" so more individuals can participate.
Beginner investment advice: Begin with a small fraction of your portfolio — 5% to 10% — and experiment with various asset classes like REITs, venture capital funds, or art-backed tokens. Look for platforms with educational content and investor safeguards.
The Reality: Every Investment Has Risks — It’s About Strategy and Diversification
Yes, certain alternative investments are riskier than the usual ones such as stocks or bonds. But here's the reality: all investments are risky — even that so-called "safe" S&P 500 index fund.
The only difference is how the risk is handled and what function the investment serves in your overall portfolio.
Numerous alternative assets can actually decrease portfolio volatility:
Property and infrastructure projects typically generate stable returns in the form of rental yield or dividends.
Private debt investment can generate fixed returns and minimal exposure to fluctuations in public markets.
Commodities and hedge funds can be used as hedges against inflation or provide non-correlated returns.
Another dimension to keep in mind is time horizon. Certain alternative assets are illiquid for a few years, but that doesn't necessarily qualify them as "riskier." It just means they're appropriate for long-term investors — people who don't require liquidity in the short term.
Beginner investment advice: Find funds with a track record, learn about the asset class, and know the risk/return tradeoff. Don't put all your eggs in one basket — diversify by sectors and durations.
The Reality: Traditional Portfolios Are No Longer Enough
The classic "60/40 portfolio" (60% stock, 40% bond) was sufficient back then — particularly during the high-interest-rate 1980s and 1990s with low inflation. But times have changed:
Inflation has increased in its unpredictability.
Yields on bonds have been slow to follow rises in inflation.
Stock markets have become more reliant on worldwide shocks, technological upheavals, and speculation.
This has prompted many investors and advisors to raise a skeptical question: Is the old portfolio model still relevant?
A balanced portfolio in the modern world now frequently contains a portion of alternative investments — not as a substitute, but as an addition. These assets provide portfolios with depth and resiliency by providing new sources of income, inflation protection, and non-correlated returns.
Some real-world examples:
Adding property to create steady rental returns and protect against inflation.
Adding venture capital to leverage the high-growth potential of startups.
Utilizing structured notes or interval funds to control risk and preserve liquidity.
Beginner investment tip: Leverage new tools such as robo-advisors, wealth management platforms, or digital asset aggregators (such as those at PCR Insights) to track performance and rebalance your portfolio with both traditional and alternative assets.
Conclusion
It’s Time to Break Free from Outdated Myths
The alternative investments universe is no longer an elite club maintained by hedge fund managers and billionaires. With easier access, enhanced knowledge, and technology-facilitated platforms, even new investors can venture into the possibilities presented by these assets.
The most important thing is to match your investments with your goals, risk tolerance, and financial timeline. Begin slowly, diversify, and get help when necessary.
And above all — don't let old investment myths hold you back from building your wealth in smarter, more sustainable ways.
At PCR Insights, we assist wealth advisors and investors in managing alternative and traditional assets via effortless data gathering and effective reporting capabilities. Private equity, hedge funds, or real estate: our platform has it all, making investing smart easier than ever.
Contact today and get to know how PCR can support your investment journey — traditional or alternative.