Alternatives Investments Provide Income For Your Retirement

In the past, to collect some additional income during my retirement, I have invested in certificates of deposit, fixed annuities and government securities. Although these are certainly less risky than most traditional investments, they pay very little; usually 2% or less.

Like most retired people, I am looking for more income and less volatility from my investments. But, because I am no longer working I also need a measure of security and stability. To accomplish my income investing goals I am considering adding some alternative investments to my portfolio.

The term ‘alternative investments’ is used to describe investments that are neither equities nor bonds or cash. The best examples of alternatives are investing in real estate, private equity, shipping containers, and hedge funds.

Real Estate: Commercial real estate, including real estate investment trusts, have proven to investors that they are a solid investment. Also, multifamily housing and apartment complexes will continue to be excellent investments as demand continues to increase. yields of between 4.5% and 6% are typically achievable.

Private Equity: Private equity is funded by investors who directly invest in private companies, or that engage in the buyout of public companies (which are then made private). Now open to more investors than ever before, private equity can often lead to high current cash flows, as well as holding potential for long-term growth.

Shipping Containers: The container shipping industry transports approximately 90% of the world’s consumer goods. This makes shipping containers an indispensable part of the global economy, and a very appealing alternative investment. Investors who are investing in shipping containers are earning monthly returns of 10% to 15%.

Hedge Funds: Using pooled money, hedge funds employ a number of strategies to earn an active return for investors. Hedge fund managers have long employed a broader spectrum of assets and tools to meet their return targets. Nowadays, these alternative strategies are entering the mainstream. According to data from Hedge Fund Research, the number of hedge funds is currently on the decline.

Retirees like myself, should definitely look outside stocks and bonds to find defensive, income-producing investments. Alternative investments can provide good distributions while avoiding the uncertainty of the market; a perfect combination.

I believe that diversifying my portfolio with non-traded alternative investments will result in lower volatility, less correlation, and an increased cash flow. In some instances returns could be 5% to 12%, and paid out on a monthly basis!