17th March 2017
According to new research, investors under 30 show no sign of slowing down post-Brexit as they plan to increase investments. A lot of investors are getting more creative with their money and are fast noticing the benefits of alternative investments at a time when yields are low and negative interest rates are hitting savers hard.
The perceived risks of alternative investments are slowly diminishing, with questions of risk within so-called ‘safe’ investments are beginning to rise.
Investors are looking for something different. In a low-yield environment, investors have been forced to explore alternative investments. Historically, alternative investments like lending to high quality small and medium-sized businesses, have proven to yield higher returns compared with more traditional forms of investments. This is because banks have to turn away seeming high-quality SMEs just because of the penal regulatory costs of lending to such a “risky” borrower. As yet, alternative lenders are not constraint by the same regulatory hurdles and can, therefore, extend loans at a higher interest rate, because of the higher perceived risks of the SME sector.
Alternative investments also aid in diversifying the portfolio in terms of risk profile and corresponding returns.
There are great alternatives out there, that not only offer attractive returns but also puts you in the control seat. Business to business lending has grown incredibly in the UK and around the globe, over the last few years.
These investment vehicles offer formidable alternatives to traditional investments. In fact, they are becoming so prominent that they are now no longer seen as alternative investments, but rather as diversified asset classes that should be part of a balanced investment portfolio. They’ve also proven to offer higher returns because they generally will have a high-risk profile.
Business to business lending is an innovative way of investing. Lenders are market makers bringing investors and borrowers together and allowing investors to lend money directly to the borrower.
The platform itself charges a small arrangement fee and the investor is often free to negotiate the interest rate directly with the borrower. As a result, investors have found that they end up getting a higher return compared with more traditional investments.