Episode 243 - What Are Alternative Investments And Should I Own Them?

In this episode, Ryan Burklo and Alex Collins discuss alternative investments and whether or not they are suitable for individual investors. They define alternative investments as those that do not fall into traditional categories like stocks, bonds, and cash. The hosts explain the concepts of correlation and standard deviation and how they relate to risk and diversification. They emphasize the importance of having a solid financial foundation, including an emergency fund, income protection, and liquidity, before considering alternative investments. The episode concludes with a reminder to prioritize balance sheet management before making investment choices.

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Takeaways

Alternative investments are investment vehicles that do not fall into traditional categories like stocks, bonds, and cash.
Understanding correlation and standard deviation is crucial for assessing the risk and diversification potential of alternative investments.
Before investing in alternative investments, it is important to have a solid financial foundation, including an emergency fund, income protection, and liquidity.
Net worth and accredited investor status may impact access to certain alternative investments.

Chapters

00:00 Introduction and Beer of the Day
00:36 Definition of Alternative Investments
04:07 Correlation and Standard Deviation
05:26 Benefits of Negative Correlation
07:10 Understanding Risk and Standard Deviation
09:18 Considerations Before Investing in Alternative Investments
10:25 Importance of Emergency Fund
11:10 Protection of Income
12:01 Liquidity and Access to Money
13:48 Net Worth and Accredited Investor Status
15:06 Alternative Investments and Balance Sheet
21:42 Access to Alternative Investments
23:33 Question of the Day and Conclusion