Alternative Investing

by Myra Thomas

As the stock market continues a wild and scary ride upward, some investors are looking to alternative investments to balance out their portfolio. While the bull market may not continue indefinitely, the equities market still remains the best and safest bet for long-term investment returns.

However, outside the realm of stocks and bonds, those looking to plunk a portion of their nest egg into a different sort of vehicle do have a few options. Besides more traditional bank offerings as certificates of deposit and money market funds, some are taking a chance on everything from real estate to collectibles.

1. Look to real estate for safe and consistent income: Those looking to purchase commercial or residential real estate will probably find that this alternative investment is one of the safest in the long-term. According to the Bryant Group, a black-owned money management firm, real estate is one of the few alternative investment vehicles that the company is currently advising their clients to consider. Certainly, the stock market is still the better bet for higher investment yields.

   The New York City-based Bryant Group specializes in helping the African-American community invest in the stock market. The firm can be contacted at (877) THE-GROUP. The Bryant Group can also be found online at www.bryantgroup.com .

   According to Dale Bryant, portfolio manager for the Bryant Group, "Real estate can provide a predictable and steady cash flow." While the market on this investment can fluctuate, historically, real estate has provided investors with a relatively secure investment vehicle.

   If you're not looking to becoming a landlord, those looking to invest in real estate can also consider investing in a real estate investment trust, or what is more commonly known as a REIT. A REIT is simply an investment pool that buys residential and commercial buildings. There are also hybrid REITs that are made up quite differently. But, generally, the properties making up the REIT are professional managed. Those that invest in a tax-exempt REIT can recognize profit from the REIT's income or through the possible appreciation of its' stock. However, with interest rates on the rise, the REIT market has taken some hits in recent years.

   Additionally, REITs are not for the novice investor. As with any investment, a good rule of thumb is that if you can't easily understand the offering materials or financial statements, you should look elsewhere. The help of a reputable investment manager or broker is always useful. Currently, Dale Bryant has been discouraging his clients from investments in REITs, as the market for them has taken a severe dip in the past three years.

   According to the Washington, D.C.-based National Association of Real Estate Investment Trusts (NAREIT), there are over 300 REITs operating in the U.S. today. NAREIT also estimates REIT assets currently total over $130 billion. The bulk, some 70% of these REITs, is publicly traded on the NASDAQ, New York and American Stock Exchanges. There are also public mutual funds that invest in REITs. Luckily, the financial statements on these publicly traded REITs are easily obtainable.

   For additional information on REITs, contact NAREIT at (202)-739-9400 or (800)-3-NAREIT. The association can also be found online at www.nareit.com .

   Additionally, NAREIT provides a free daily email report, which provides a comparison of the market performance of publicly traded REITS against the S&P 500 and the Dow Jones Industrials.

2. All that glitters: From gold to silver to platinum, the precious metals market is broad. However, in recent years, the price has bottomed out for gold, silver and the like. Generally, there had been a contrarian relationship between the price of gold and the rise of the stock market. However, that old pattern appears to no longer hold true. Twenty years ago, many investors would hold onto gold coins and bullion as a hedge against the low points in the equities market. However, with the Swiss and other large holders of gold dumping their reserves on the market in the last few years, the price on the metal has hit rock bottom.

   Most investment managers will agree that sitting on large quantities of gold coins or bars of bullion is a lousy idea. However, with gold prices near an historic low, now might be a good time to purchase a few coins from a reputable dealer. Think of gold as the investment of last resort.

   Look for gold American Eagle or U.S. mint silver dollar coins as the safest choice. Check out http://goldprices.com for the current market value on gold and silver.

   However, look out for those hawking rare gold coins. Without a good knowledge of the investment, there is always the possibility of paying too much or selecting a counterfeit item.

3. A passion for collectibles can sometimes pay off:

   In the realm of collectibles, those with a penchant and knowledge of everything from wine futures to antique furniture can often earn a tidy penny. But, as the old adage goes: Buyer Beware! There is a plethora of knockoffs in the collectibles market, including everything from fake African art to counterfeit Civil War items.

   As with any collectible, a firm understanding of the item, the market for it, and the resale value comes with time and effort. There are innumerable organizations and associations dealing with a variety of collectibles and antiques. Look for major trade publications on the subject or look online to locate a well-known and established association. Joining one of these organizations can certainly help with your learning curve on the subject.

   If you are looking to make a purchase or a sale, check out the market beforehand. Currently, the catalogs of the major auction houses, from Sotheby's to Christie's, are available to the public. For less pricey items, there are specialized auctioneers that handle everything from collectible autographs to Rookwood pottery. A little legwork will help you locate some of the more popular auctioneers for the collectible of your interest. Once an item is sold, the price it is sold for is easily obtainable from the auctioneer.

   Private transactions, sales of collectibles from one person to another or to a private dealer, demands that the buyer and seller have a certain level of knowledge on the marketability of the piece. Otherwise, be prepared to lose some cash. If you choose to do business with a dealer, look for one that is well established and willing to guarantee the authenticity of the item that he or she is selling. The same caveat applies when buying or selling online at one of the many popular auction websites, such as the ones run by Amazon.com, eBay, or Yahoo. However, note that some in the collectibles world are worried that the online auctions are fraught with fakes.

   Surprsingly, those looking for an appraisal from the comfort of their armchair can now get their wish---thanks to the Internet. With the help of a popular website, Auctionwatch.com, collectors pay about $20 and can get an item valued in about three business days. All that's required is a digital image of the collectible and a short description of the piece. The appraisal is charged to a major credit card, and then the report is delivered to a secured website. Check out the process at www.auctionwatch.com/my/appraisal.

   Please remember that the market for collectibles tends to increase and, more importantly, decrease in direct relation to the economy. With the current economic boom, collectors are flush with cash, and ready, willing and able to bid up the price on desirable pieces. Currently, African antiquities and Arts and Crafts furniture and pottery are just a few of the collectibles that are currently in hot demand.