Discussing Alternative Assets With The Megacast

I met with Tyler from The Megacast to talk about making a profit in a way many people may not consider: alternative assets.

Let's break it down. 

When we typically think about an asset class, we think about stocks and bonds. Same as real estate. 

When the market or real estate isn't working for you, consider alternative assets such as gold, watches, and cars.

As an example, I bought a Ferrari after hearing about alternative assets and that I could potentially make money by selling the car afterward.

I had the car for two years and made a $35,000 profit when I sold it.

Sometimes these assets are produced in limited quantities, so when production is over, they can possibly become a collector item or it brings up the price because you can't get it anymore.

Watches can also be a great investment, especially higher end brands, such as a Rolex. They can hold their value but they also only make limited quantities. 

They can even increase 10-20% in value and you get to enjoy a nice piece of jewelry while you own it. 

The best time to start exploring is right now. 

You won't be able to stop an opportunity unless you've been preparing for it. When it's time to flip that asset, you have to make a quick decision and don't want to have to study when it's time to move.

It's always a good idea to have experience investing in traditional assets, like the market or real estate, to prepare yourself for the alternative asset route.

You need to make sure you can safely store these assets so they do not get damaged as well. Do you have the garage space for an extra car?  A safe to hold a watch? Can you afford the maintenance and insurance policies on those items?

Even if you're not financially ready to make those investments, it shouldn't stop you from doing your research. There is always risk associated with any assets. 

If you buy a Rolex second-hand and aren't familiar with the brand, you could possibly pay a lot of money for a fake. 

You want to make sure you're finding the right item and taking proper care of it to make sure your investment was worth it. How many miles can you drive on that exotic car before it's undesirable?

The good thing about alternative investments is that someone will always want a Ferrari or a Lamborghini.

So in essence, the risk is pretty low if you're buying an alternative asset that people will want.

Similar to the market, if you're buying a good company, such as Amazon, that people use the risk is fairly low. You're not going to lose all of your money unless Amazon goes out of business or someone develops a better e-commerce company.

For alternative assets, there will always be someone that can afford that car, especially at the right price. There will generally always be a market for those assets that are rare or limited. 

The price fluctuations in the alternative asset market aren't as large as the market either. You won't see a Rolex drop to $5,000 then shoot back up to $20,000. It may drop down to $18,000 and then go back up to $20,000. 

One of the differences is that you won't see a car or watch shoot up 200% in value or drop 50-100% in value either. 

You won't see those types of gains in an alternative asset, but because of this, you won't lose all your money either. 

Compared to the market, you can hold a stock long term, 10-30 years and hopefully earn a profit over time. With the alternative asset, you may have to continually purchase new items to see consistent returns.

As a side note, the alternative asset market is not just limited to watches and cars. There are a lot of high-end handbag designers such as Hermes that can can actually resale for much higher after market. 

Maintenance is a typical thing for alternative assets and can even potentially increase the value of the asset.

People want to know the item they are buying second hand was taken care of.  Buyers will ask when a watch was last serviced to make sure the inner workings are performing as intended. 

A Ferrari shouldn't just sit in a garage. The tires need to be maintained so they don't go flat, the oil needs to be replaced, the wires and cables need to be inspected. That can run a few thousand a year but in the end, buyers want to know their item is in the best shape. 

We are getting close to the end of the Fed's interest rate hikes so the bottom may be near. As of this interview, the interest rate for houses was at 7% - so while short term this isn't great, long term it will help the prices of houses go down. 

This is now the opportunity for us to afford stocks such as Apple and Amazon at a great price. In time, these values will increase.

Looking to learn more about the market? Check us out at Power Trades University.