Scramble for Alternatives to Wall St Finally Underway

The investment landscape is shifting, and young investors are leading the charge. Tired of the traditional stock market's volatility and lackluster returns, they are turning to alternative investments (alts) in search of higher returns and diversification. This trend, fueled by the rise of retail investing and the influence of social media, is reshaping the investment world.

According to a survey by Lansons, 30% of Gen Z and 25% of millennials have invested in or are interested in alternative investments. This growing interest is driven by several factors:

1. Potential for higher returns: Alternative investments like cryptocurrencies, precious metals, and artwork have shown the potential for significant returns, especially in a high-inflation environment.
2. Hedge against market volatility and inflation: Alternative investments like farmland and precious metals can serve as a hedge against market volatility and inflation, as they often have low or negative correlations with traditional assets.
3. Tangible, enduring value: Some alternative investments, like farmland and artwork, offer tangible, enduring value that can be appealing to young investors looking for assets that hold their worth over time.
4. Diversification: By investing in alternative assets, young investors can diversify their portfolios beyond traditional stocks and bonds, potentially reducing overall risk.

However, investing in alternative assets comes with its own set of challenges:

1. Liquidity: Many alternative investments are inherently illiquid, making it difficult for investors to quickly buy or sell these assets without potentially significant loss in their value.
2. Lack of regulation and transparency: Alternative markets are often less regulated and transparent, which can increase risks and make it more difficult to accurately assess an investment’s value.
3. High minimum investment requirements: Some alternative investments have high minimum investment requirements, which can be a barrier for young investors with limited capital.
4. Illiquidity and lack of diversification: Alternative investments often lack liquidity and diversification, which can make them more susceptible to market fluctuations and less suitable for risk-averse investors.

To mitigate these challenges, young investors can consider the following strategies:

1. Diversification: Diversifying across multiple alternative asset classes can help mitigate the risks associated with illiquidity and lack of diversification in individual assets.
2. Education: Investing in alternative assets requires a different set of skills and knowledge than traditional investments. Young investors should educate themselves about the unique characteristics and risks of alternative investments before making a play.
3. Accessing platforms and funds: Many alternative investment platforms and funds have lower minimum investment requirements, making them more accessible to young investors with limited capital.
4. Partnering with experienced investors: Young investors can partner with experienced investors or join investment clubs to gain access to alternative investments and benefit from their expertise.
5. Considering liquid alternatives: Some alternative investments, such as liquid alts, offer the potential for higher returns while maintaining a level of liquidity similar to traditional investments.

In conclusion, the scramble for alternatives to Wall St is finally underway, with young investors leading the charge. By embracing alternative investments, they can potentially achieve higher returns, hedge against market volatility and inflation, and diversify their portfolios. However, it's crucial for young investors to be aware of the unique risks and challenges associated with alternative investments and to employ strategies to mitigate these risks. As the investment landscape continues to evolve, young investors are well-positioned to capitalize on the opportunities presented by alternative investments.