JS Blogcast 63 - A Brief Guide to Alternative Investments
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Jason Hartman has talked a lot about how the stock market is simply a modern version of organized crime–stocks manipulated daily, fluctuating and changing as the sun rises and sets. As you probably know, Jason prefers the stability of income property. While businesses ebb and flow, the need for housing remains constant. Essentially, these type of investments get rid of the middle man, giving you complete control and ownership of your investment. And investments should pay–otherwise, they’re nothing more than speculations. Which can be alright, if they equal a very small percentage of your investments. Jason Hartman also frequently recommends a diverse portfolio, which may include some international investments. Investments across a number of jurisdictions, bank accounts across the globe, and passports internationally all help diversify your portfolio and protect and grow your assets. But investing abroad can be very complicated, and requires a bit of research. It may also require the consideration of different kinds of investments. It’s important to note that even real estate is sometimes considered an alternate investment (as it is not a stock, bond, or cash). While real estate transactions have happened for a very long time, investment property is most often still considered an alternative investment. Working with a trust company If you’re going to be doing business internationally, it’s a great idea to manage your money through a trust company. When you work with a trust company, you simply set up a relationship with a trustee. You’ve probably heard of people setting up trusts for children, etc. to access down the road. Until that time comes, a trustee manages the assets. Trusts are wealth management tools, established to protect assets by minimizing litigation risks. Trusts also can be located offshore, which allow for a variety of tax benefits. But trusts can be tricky.  Should a judge question your trust in cases where money is owed, you could be in trouble. But it depends on how the trust is structured, so make sure that yours best protects your assets. If you’re working through a trust, you also need to make sure that your assets cannot be stolen by the trustee. When assets are easily liquidated, this risk increases. For example, hard assets (like income property) are more difficult to cash out and are thus safer than other types of assets. Alternate investments Luckily, there’s always income property, but additional alternate investments are always worth considering. Alternative investments are those investments which fall into an asset class that is not stocks, bonds, or cash. It can include tangible assets (like metal, wine, art, other things people tend to collect). It can also include real estate funds, commodities, hedge funds, venture capital, even film production. The Merrill Lynch/Cap Gemini Ernst and Young World Wealth Report from 2003 indicated that high net work individuals typically have about 10% of their assets in alternative investments (structured products, luxury valuables and collectibles, hedge funds, managed futures, and precious metals), as defined by the report. In 2007, this was reduced to 9%. Timber That’s right, ladies and gentlemen–timber is more than just another annoying Ke$ha/Pitbull song. Bobby Casey, from Global Wealth Protection, recently spoke with Jason Hartman about his alternate investments. He’s got a timber farm in Nicaragua that yields 15% annually. Because trees mature at different rates, wealth is compounded with such an investment. The longer the trees grow, the bigger they get–a great deal, if you’re selling by the pound. The property is in his own name and is managed by local employees who share in the profit. Of course, there are risks involved (as with everything)–political, business risk, management risk. Ultimately though, pe
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