Personal finance, like just about everything else, is mainly common sense. Advice like “don’t spend more than you make; start investing while you’re young; don’t loan money to friends with the expectation of getting it back,” have been around for generations, and most likely will survive the next few generations as well.
It's been a little while since we visited the topic of alternative investments. In the last piece, published in January, we tried to wrap our arms around what the term 'alternative' really means. Today we're going to look at how alternatives are actually used. While the focus is on the asset side of the equation (as opposed to the strategy side), this snapshot can give you an idea of how real world investors position alternatives in their portfolios.
One thing I wanted to point out is that there are some alternatives that can not or should not be used in certain parts of your portfolio. For example, collectibles are generally an outright no-no in your IRA. Also, while limited partnerships are allowed, they are fraught with peril in IRAs due to a tax term called Unrelated Business Taxable Income (UBTI), which could subject the IRA to current taxation.