Rivkin Report: There is an Alternative (To Equities)
Investors looking for an alternative asset to the stock market have several options. Cash and bonds currently pay a relatively high yield. But with central banks starting to cut interest rates, the yield earned on that asset is set to decline.
If inflation surges higher, investors could end up losing money in real terms investing in cash or bonds today. Precious metals have been holding up well this year. But they can still be volatile, and don’t provide a yield.
However, alternative assets exist as well. That includes cryptocurrencies, which have great overall returns but significant volatility. Precious metals hold up well over time, but can have significant periods of underperformance. Neither generate income.
Investors can also look at investing in places such as private credit. That offers some upside potential, combined with yields as high as 9%.
Private credit involves lending money to companies or individuals. And such private credit investments don’t trade on exchanges. While that avoids market volatility, it also means investors will lack liquidity. They would need to find another seller to exit the trade.
However, with yields, often paid monthly, investors looking for current income may find this niche part of the market attractive. Private credit provides a high-yielding alternative asset. That can help reduce the damage done by a market downturn.