The Future of Investing: Why Alternative Investments Are Gaining Traction

In recent years, alternative investments have gained traction among investors seeking to diversify their portfolios and generate higher returns.

Traditional investments, such as stocks and bonds, have been subject to increased volatility, low interest rates, and uncertain economic conditions.

As a result, investors are looking beyond traditional asset classes and exploring the world of alternative investments, including syndicated investments, private equity, and real estate.

In this blog post, we will discuss the reasons behind the growing popularity of alternative investments and how syndicated investments can play a significant role in the future of investing.

The Appeal of Alternative Investments

Alternative investments are financial assets that do not fall into the conventional categories of stocks, bonds, or cash. They typically include real estate, private equity, hedge funds, commodities, and other types of assets that offer exposure to different investment strategies and market sectors. Here are some of the key reasons why alternative investments are gaining traction:

1. Diversification

One of the main attractions of alternative investments is their potential to provide diversification benefits within a portfolio. Since these investments are not directly correlated with traditional asset classes, they can help investors reduce the overall risk of their portfolio and achieve more stable returns over time.

2. Higher Returns

Alternative investments often provide the potential for higher returns than traditional investments. This is especially true in the current low-interest-rate environment, where traditional assets like bonds may not offer the level of return that investors require to meet their long-term financial goals.

3. Inflation Hedging

Some alternative investments, such as real estate and commodities, can act as a hedge against inflation. As the prices of goods and services rise, these investments may appreciate in value, helping investors preserve their purchasing power and protect their wealth.

4. Access to Unique Investment Strategies

Alternative investments offer investors access to unique investment strategies and market sectors that are not available through traditional investments. This can help investors exploit new opportunities for growth and diversification within their portfolios.

Syndicated Investments: A Promising Alternative Investment Option

Syndicated investments, particularly in real estate, have emerged as a popular alternative investment option for investors seeking diversification, passive income, and exposure to professionally managed properties. These investments involve pooling capital from multiple investors to acquire and manage a property, with the investors sharing in the property's income and appreciation.

Here are some of the key benefits of syndicated investments:

1. Passive Income Generation

Syndicated investments offer investors the opportunity to generate passive income through their share of the property's rental income. This can provide a steady source of cash flow, supplementing other sources of income and helping investors achieve their financial goals.

2. Professional Management

In a real estate syndication, the property is managed by a sponsor or general partner who has experience and expertise in managing similar properties. This professional management can help ensure the property's success and maximize returns for investors.

3. Economies of Scale

By pooling capital from multiple investors, syndicated investments can provide access to larger, institutional-quality properties that individual investors may not be able to afford on their own. This can result in economies of scale and increased efficiency in property management, leading to higher returns.

4. Tax Benefits

Real estate syndications often provide investors with tax benefits, such as depreciation deductions and the ability to defer capital gains through a 1031 exchange. These tax advantages can help enhance the overall return on investment for investors.

The Future of Alternative Investments and Syndicated Investments

As the investment landscape continues to evolve, the popularity of alternative investments is expected to grow. Investors will increasingly seek out these assets to diversify their portfolios, generate higher returns, and gain exposure to unique investment strategies.

Syndicated investments, in particular, will likely continue to gain prominence as investors recognize the benefits of passive income, professional management, and access to institutional-quality properties. The following trends may further drive the growth of syndicated investments in the coming years:

1. Technological Advancements

Technology has revolutionized the investment landscape by making it easier for investors to access alternative investments, including syndicated investments. Platforms and online marketplaces have emerged, allowing investors to efficiently discover, evaluate, and invest in syndicated deals. These technological advancements will likely continue to facilitate the growth of syndicated investments by lowering barriers to entry and increasing transparency within the industry.

2. Regulatory Changes

Changes in regulations, such as the JOBS Act, have made it easier for sponsors to raise capital for syndicated investments and for investors to access these opportunities. As regulatory frameworks continue to evolve, it's expected that syndicated investments will become more accessible to a broader range of investors, further fueling their growth.

3. Increased Investor Education

As more investors become aware of the benefits of alternative investments, including syndicated investments, the demand for these opportunities will likely grow. Educational resources, such as blogs, podcasts, and webinars, are helping investors understand the nuances of syndicated investments and make informed decisions. As investor education continues to improve, the popularity of syndicated investments is expected to rise.

4. Globalization

Globalization has facilitated the flow of capital across borders, opening up new investment opportunities for investors worldwide. Syndicated investments, particularly in real estate, can provide international investors with exposure to different markets and economies, further diversifying their portfolios and reducing risk. The continued trend of globalization is likely to contribute to the growth of syndicated investments in the future.

Conclusion

The future of investing is shifting towards alternative investments as investors seek diversification, higher returns, and access to unique investment strategies.

Syndicated investments, especially in real estate, will likely play a significant role in this evolving landscape, offering passive income, professional management, and exposure to larger, professionally managed properties.

At Arete Investing, we have spent the past decade understanding syndicated investments and working with over 50 sponsors/general partners to develop processes for evaluating sponsors and deals.

Our expertise has allowed us to raise over $25MM, generating well over a 20% IRR.

If you're interested in exploring syndicated investments and taking control of your investment strategy, schedule a call with us to learn more and become a member of The Arena: Schedule a Call