2. Alternatives react differently to news than the stock market does

One of the most notable advantages of alternatives is the protection they provide against the stock market’s volatility. In today’s landscape of frequent volatility and recession talk, alternatives continue to be a sought after choice. Alternative assets typically perform with a low correlation to stocks and bonds. This means if your stocks are down, your alternatives are likely to remain steady. The two are not correlated, which means investors can have a fallback in the event of their other investments not performing.

4. Alternatives use time to your advantage

Some investors scoff at the idea of owning an investment that ties up their money for a set period of time. Such investors point to lock-up agreements in alternative investments – private equity, venture capital, and real estate – as being reason enough to avoid them entirely. Investors with this mindset may very well be making a significant financial planning mistake. Let alone missing out on potentially lucrative investment opportunities. The illiquidity aspect of alternative investments is actually what allows them to fare so well. By adding long-term illiquid alternative investments to your portfolio, you are giving your money more time to grow and compound, and you’re also saving yourself from prematurely tapping into funds that have not yet reached full potential. In real estate, for example, properties need time to appreciate in order for investors to achieve desirable returns. Properties don’t typically go up in value overnight, but they historically increase in value year-over-year.

6. More choices for investors

We live in a world of choices, and alternatives give you just that. People enjoy the idea of investing in something other than the cookie-cutter stock and bond market. There is also the allure of investing in an industry that you are interested in, such as coins, wine, real estate, farmland, or cars. No more playing by old-school rules or being limited to few options–with alternatives, you are choosing exactly what you are investing in.