3 Benefits of Long-Term Investing in Alternative Investments

By Sang H. Lee,  CEO at DarcMatter,

Alternative investments often require a certain level of patience as many of these assets lack the liquidity inherent in the public markets.  However, there are several benefits associated with taking a long-term approach by investing in illiquid alternatives.

 

download (3)

(1) Avoiding Market Volatility

Alternative assets often mitigate market volatility present in more traditional investments like those found in the public markets.  These risk mitigants are put in place by investing in asset classes like private equity, as well as adhering to certain strategies represented by many hedge funds.

Investors have the tendency to react hastily when markets turn sour as they generally lack the ability to fully understand the underlying causes of this volatility.  The inherent illiquidity of alternative investments creates a natural hedge against the myopic knee jerk reaction of the average investor.

 

(2) Lower Transaction Costs

Short-term investing often requires high amounts of turnover, leading to the creation of high transactions costs.  While short-term investing sometimes yield high returns, many of these benefits are offset by the costs of maintenance and rebalancing of a portfolio.  It is often difficult to create a model to generate an efficient portfolio for maximized returns while limiting high transaction costs.

Alternative investments often have higher upfront fees compared to other traditional investments, but this is often mitigated by the fact that these investments are typically not subject to high turnover and ongoing maintenance and transaction costs.

 

(3) Tax Benefits

While not unique to alternative investments, long-term investments (longer than 12 months) have certain tax benefits.  These longer-term investments are subject to long-term capital gains tax, which is lower than the taxes incurred from short-term investments.  Additionally, capital gains tax is generally only incurred upon realized gains.  As a result of the longer holding periods of illiquid alternatives, these investments may hedge against short-term capital gains taxes.  Consult with your financial consultant and/or tax advisor in order to determine which investments may be best suited for your portfolio and long-term investment strategy.

 

DarcMatter is a technology platform providing enhanced capital connectivity between issuers and investors in the alternative investment space. Visit DarcMatter.com to start raising capital or get transparent access to alternative investment opportunities.

 

NO FINANCIAL ADVICE – The Information on this website is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this website and provided from or through this forum is general in nature and is not specific to you the User or anyone else. YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED ON THIS FORUM WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A PROFESSIONAL BROKER OR COMPETENT FINANCIAL ADVISOR. You understand that you are using any and all Information available on or through this website AT YOUR OWN RISK.

Tags: , , , , ,

HEADLINE NEWS

Marketplace.orgCrowdfunding for your lifeMarketplace.org"When I took that phone call, and I learned that this was just going to completely uproot my whole life, I'd say I spent maybe 10 seconds or so only freaking out about myself and whether or not I would die. And then imm [...]

The HinduYoung Moroccans change lives with crowdfunding - The HinduThe HinduAccess to funding is vital for young Moroccan companies. Two young men have recently developed an application that enables projects to get financed by ...and more » [...]

TIMEA Crowdfunding Effort Launches to Commemorate Khadija Saye, Artist Killed in London InfernoHyperallergicOn Saturday, friends and supporters of the artist Khadija Saye — who died in the devastating Grenfell Tower fire in west London last week — launched a crowdfunding campaign to c [...]

Santa Ynez Valley NewsTrikke Tech consolidates operations in Buellton, launches ...Santa Ynez Valley NewsTrikke Tech Inc. has consolidated all its operations at a new location in Buellton and launched a crowdfunding campaign to help the company expand and ...and more » [...]

CBS NewsNow you can crowdfund a 529 college savings plan - CBS NewsCBS NewsIt's getting easier to have friends and family add their contributions to these accounts for college savings.and more » [...]

ForbesThis $130 Million Fund Is Leading The Way In Real Estate CrowdfundingForbesWhen people think of crowdfunding, the first word that jumps to mind is Kickstarter. But crowdfunding is not limited to supporting the next card game or independent film. Crowdfunding is becoming a viable [...]

Forbes"Make Yourself Available" - An Audio Entrepreneur's Tips For Successful CrowdfundingForbesIt takes a brave individual to launch Bluetooth speakers and headphones into a crowded audio market. Take a stroll around your local consumer electronics stores and you' [...]

WMFD.comLegislation Permitting Intrastate Equity Crowdfunding PassesWMFD.comCOLUMBUS, OH - State Representative Mark Romanchuk (R-Ontario) Thursday applauded the Ohio House for approving legislation that permits, in certain circumstances, intrastate equity crowdfunding, with the goal [...]

Business InsiderCrowdfunding for medical expenses - Business InsiderBusiness InsiderAlmost half of the money raised on crowdfunding sites like GoFundMe and YouCaring is going toward medical expenses. Medical campaigns make up $930 ...Americans Losing Health Insurance Turn To Crowdfund [...]

PC GamerAshes of Creation launches 'Summer Crowdfunding Extension ...PC GamerThe ambitious MMO Ashes of Creation was successfully crowdfunded in just one day last month, before ultimately accumulating a staggering $3271809—this ...and more » [...]

CFB Finance

Syml
Lst Val
+/- Val
+/- %

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |