University: Alternative Assets

Alternative assets can come in many different forms and is not limited to art and antiques, although both can be a major part of such assets. An alternative asset is a non-traditional asset and can also include precious metals (like grandma's gold wedding ring), fine wines, rare stamps and coins, and collectibles like trading cards or sports memorabilia. As you learn via a university education, these alternative assets often gain much of their value over a longer period of time. For example, a baseball signed by Babe Ruth is worth more in 2009 than it was in 1959. So investors who want to incorporated alternative assets in their investment portfolio should be aware that they're involved in a long-term investment.

Alternative assets, because they tend to be less liquid, are not simple to sell if few cash is needed. These may take more time to move than stocks, bonds or mutual funds, which can be sold almost instantaneously in order to raise capital. Often alternative assets take longer to liquidate because the assets must be appraised or placed at auction and sold to the highest bidder. (More about that process is taught in many university classes.)

Alternative assets also include private equity, venture capital, hedge funds and real estate. These alternative assets are generally more risky than traditional assets, but they can generate higher returns for investors, facts that are explained at the university level.

Even new university students learn the importance of diversification in their portfolio. Alternative assets definitely add diversity to a portfolio. Art and antiques, precious metals, stamps and coins offer a good blend, since they are not tied to the direction of the stock market. A university education can show how this will help balance a portfolio that may be too heavy with stocks and bonds.

A disadvantage to alternative assets, as taught at the university level, concerns their non-traditional nature. Banks may opt to tack on additional fees to hold the items. There may be additional tax concerns, which can be addressed by taking an accounting course while at the university or by talking to a tax professional. Pinpointing the proper value can also be disconcerting.

Overall, the idea of alternative assets is appealing. Many of these items likely contain sentimental value, meaning the holder is only likely to sell them in case of an emergency. The human factor can make it easier for an investor to hold for the long term, unlike a stock or bond, which has little sentimental value and can be disposed of quickly and painlessly.