Investing term

What is Alternatives?

Investments outside the core stocks/bonds/cash mix — REITs, commodities, gold, crypto.

Alternatives are investments outside the core stock/bond/cash mix — real estate (REITs), commodities, gold, private equity, hedge funds, and crypto. People add them hoping for returns that don't move in lockstep with stocks. They can genuinely diversify, but many carry higher fees, less liquidity, or extreme volatility, so they usually belong as a small slice, not the core.

For example

Adding a 5% gold sleeve to a stock portfolio is using an alternative — it may hold steady or rise in a year stocks slump, smoothing the overall ride.

Alternatives is taught hands-on in Stage 4 — Stocks, Bonds, Cash & Alternatives.

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Related terms

BondA loan from you to an issuer (government or company), repaid with interest on a known schedule.Capital gainThe profit from selling an investment for more than you paid.CommodityA raw physical good like gold, oil, wheat, or copper — priced by the ounce, barrel, or bushel.CorrelationHow tightly two investments tend to move together, measured from +1 (identical moves) to −1 (opposite moves).
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