For years, income investors had no choice but to turn to the stock market for yield thanks to the mantra “TINA,” which stands for “There Is No Alternative.” But investors don't have to invest only in stocks; there is an entire world of investments available to them, from bonds and individual securities to mutual funds and exchange-traded funds (ETFs).
Investors have been exploring alternative investments such as real estate, private equity, and venture capital. These investments can offer diversification, tax advantages, and higher returns than traditional investments. But these investments are also more illiquid and involve higher risk.
The newest investing mantras are “TARA” (There Are Real Alternatives), “TAPAS” (The Alternatives Pay Attention to Sustainability), and “TIARA” (The Investment Alternatives Responsibly Achieve Returns). These new mantras are designed to encourage investors to explore alternative investments and to consider not just the potential return but also the risk and the sustainability of the investment.
ESG investing, or “environmental, social, and governance” investing, has been gaining traction in recent years, as investors recognize the importance of considering issues such as climate change, social justice, and corporate governance in their investment decisions. The U.S. Congress has taken notice, and in March 2021, Senators Dick Durbin, Bernie Sanders, and Tina Smith reintroduced The Freedom to Invest in a Sustainable Economy Act, which would give investors the freedom to choose ESG investments.
In addition to ESG investing, investors are exploring other alternative investments such as impact investing, cryptocurrency, and real estate. Impact investing seeks to generate positive social and environmental returns as well as financial returns. Cryptocurrency, while still highly speculative, is gaining traction as an alternative asset class. Real estate investing, while still requiring significant capital, can provide diversification and income.
As investors explore alternative investments, they should remember that these investments involve risk and that there is no guarantee of return. They should also consider their own goals, risk tolerance, and ability to manage the investments. Professional advice is recommended for investors who are new to alternative investing.
