Yes, private credit is considered an alternative investment. Unlike publicly traded bonds or traditional fixed-income securities, private debt comprises loans or debt securities that are not publicly traded.

Typically, private credit offers investors the opportunity to earn higher yields than traditional bonds, but it also has downsides.

Investing in private credit often involves more complex structures and more due diligence.

As these loans are not easily traded on public markets, the lack of liquidity is a key consideration for investors.Private credit usually has a 12 month time frame.

Am I looking for diversification or different sources of risk and return?

If you’re seeking to diversify your portfolio beyond the confines of traditional asset classes like stocks and bonds, or if you’re chasing different sources of risk and return, alternative investments could be a fitting addition.They can hedge against market volatility and offer new avenues for potential profit.

Am I comfortable with paying higher fees?

Alternative investments often come with higher management and performance fees.If you’re willing to absorb these additional costs in pursuit of the advantages that alternatives can provide — such as diversification and the potential for higher returns — then they may be worth considering.

Do I fully understand the complexity?

Alternative investments can be intricate, involving nuanced strategies and a higher degree of risk.Thorough due diligence is imperative to grasp your chosen alternative asset’s idiosyncrasies and potential downsides. If you’re comfortable navigating this complexity or willing to engage experts who can, alternatives may be viable.

Am I okay with lower liquidity?

The illiquidity of many alternative investments means you may need more time to sell your asset at market value on short notice.If you have a longer investment horizon and can tolerate this lack of liquidity, alternatives can be a fruitful component of your investment strategy.

An honest appraisal of your investment goals, risk tolerance and understanding of these unique assets will help clarify whether they align with your financial objectives.

Private Equity,

Venture Capital,

Hedge Funds,

Private Credit,

Real Estate,

Commodities

Private equity involves investing directly in private companies or buying out public companies to delist them. It offers the potential for high returns but comes with higher risk, long-term commitment, and lack of liquidity. Due diligence is crucial in assessing the company’s potential.

Hedge funds are less regulated, can use leverage and short selling, and are open to accredited investors. Mutual funds are more regulated, primarily invest in stocks and bonds, and are open to the general public.

Real estate investments offer potential for steady income through rentals, property value appreciation, tax benefits, and portfolio diversification. However, they require significant capital and come with risks such as market fluctuations and property management issues.

Venture capital funds invest in early-stage startups with high growth potential. They provide capital in exchange for equity, aiming for substantial returns when the startups succeed. This investment type carries high risk and is suitable for investors with a high risk tolerance.

Commodities, such as gold, oil, and agricultural products, can hedge against inflation and diversify a portfolio. They often have a low correlation with traditional asset classes, offering potential risk mitigation and return enhancement.

Tax treatment varies by investment type and jurisdiction. Private equity and real estate may offer tax benefits through depreciation and long-term capital gains. Hedge funds and commodities may have more complex tax implications. Consulting a tax advisor is recommended.