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The Surprising Role Alternative Investments Play in Portfolio Diversification

The article from Investopedia discusses the importance of diversifying an investment portfolio beyond traditional stocks and bonds by incorporating alternative investments. It explains that alternatives, such as real estate, commodities, hedge funds, private equity, and collectibles, can offer benefits like lower correlation with traditional markets, potential for higher returns, and a hedge against inflation. The piece outlines various types of alternative investments, detailing their unique characteristics, risks, and how they can enhance portfolio diversification. It also provides guidance on how investors might approach these assets, considering factors like liquidity, investment horizon, and risk tolerance. The article emphasizes that while alternatives can reduce risk and improve returns, they also come with their own set of complexities and costs, suggesting that investors should thoroughly understand these before committing capital.

Read the Full Investopedia Article at:
[ https://www.investopedia.com/how-to-diversify-portfolio-with-alternatives-8779439 ]