Discover How College Graduates Can Diversify Portfolios and Grow Wealth with Alternative Assets, Even As a New Investor

Investing can feel intimidating, especially if you’re just starting out and unsure where to begin. One exciting option is alternative assets—a growing part of the investment world.

Alternative assets are gaining popularity as a way to let investors diversify and grow wealth. In fact, the global alternative investment industry is projected to grow from $15 trillion in 2022 to $24 trillion by 2028—a 60% increase.

For new investors like you, alternative assets can offer unique opportunities to start small, experiment, and build confidence in your financial decisions. 

In this guide, we’ll break down what alternative assets are, why they matter, and how you can get started—even if you’re fresh out of college. Whether you’re curious about real estate, private equity, or merchant cash advances, this guide has you covered.

What Are Alternative Assets?

Alternative assets are investments outside the traditional options of stocks, bonds, and cash. These include real estate, private equity, merchant cash advances (MCAs), collectibles like art, and even cryptocurrencies. 

Unlike traditional investments, alternative assets often have lower correlations to the stock market, meaning that alternatives can perform differently during stock market ups and downs.

But Why Should I Consider Alternative Assets as a Recent Graduate?

Starting your investment journey early gives you a huge advantage: time. 

When you begin investing right after college, you can give your money more time to grow through compound interest—which is where your returns earn you extra returns. 

For example, if you invest $1,000 and it earns 10% in a year, you’ll have $1,100. Next year, that $1,100 earns another 10%, giving you $1,210. 

Over time, this snowball effect can significantly grow your wealth.

As a young investor, you have even more time to benefit from compound interest. Even small-scale investments now can grow into substantial wealth over time. 

Types of Alternative Investments You Can Explore

Real Estate

Real estate investing involves purchasing, owning, or financing properties to earn income or see their value increase. 

• Fractional Ownership:

  • Where you invest in a share of a property without needing a massive upfront payment.
  • Example: Platforms like Fundrise let you invest in rental properties with as little as $500.
  • Benefits: You could earn passive income from rental profits and property appreciation.
  • Risks: Real estate markets can fluctuate, and returns are not guaranteed. For example, during the 2008 housing crisis house prices dropped by almost 30%, leading to serious losses for some real estate investors.
  • If you want to find out more about real estate investing, click here. 

Private Equity

Private equity involves investing directly in private companies that aren’t listed on public stock exchanges yet. This often includes startups or businesses looking to grow, offering you the chance to support new business growth while potentially earning high returns.

• Crowdfunding Platforms for Startups:

  • Invest in early-stage companies through platforms like StartEngine or Wefunder.
  • Benefits: You can support brand new businesses that might be doing exciting, boundary pushing things – while potentially earning high returns if the startup succeeds.
  • Risks: Startups can (and most often, do!) fail, making these investments potentially a lot riskier and less liquid. Some private equity investments have lockup periods of 10 years or more. 
  • If you want to learn more about private equity, click here to learn more. 

Merchant Cash Advances (MCAs)

With MCAs, you provide funds to small businesses in exchange for a slice of their future sales.

• Platforms like Supervest allow you to pool funds into MCA portfolios, diversifying their exposure and minimizing risk.
• Benefits: MCAs can potentially generate more consistent returns, because they’re repaid over time.
• Risks: If a business struggles, it could affect your returns. But diversification can potentially help to minimize this risk.
• For more information about how MCAs work, click here. 

Cryptocurrencies

• What They Are:

  • Digital currencies like Bitcoin and Ethereum that operate on blockchain technology.
  • Benefits: Cryptocurrencies can offer high returns in a short time due to market growth. In 2024, Bitcoin reached a record high when the price of single Bitcoin topped at $108,000, creating a lot of wealth for those who invested early.
  • Risks: Cryptocurrencies are extremely volatile and require a high tolerance for risk. In 2022, the crypto market faced a major crisis when Bitcoin’s price slumped below $20,000, losing 75% of its value over 12 months. This sharp decline resulted in huge losses for many investors who bought at higher prices.
  • If you want to learn more about crypto, click here for a more in depth guide. 

How to Get Started with Alternative Investments

Getting started with alternatives might feel intimidating, but with the right approach, it’s easier than you think. Here’s 5 top tips for how you can get started with confidence:

1. Research Platforms Carefully

Whether you’re looking at fractional real estate, crowdfunding for startups, or MCAs, make sure the platform you choose is reputable and transparent about how they operate.

• Look for clear explanations of fees and how they affect your returns.
• Try reading user reviews to get a more solid idea.
• Tools like Morningstar can help you evaluate platforms by providing trusted analyses and insights into their performance and reliability. 

2. Start Small and Diversify

You don’t need to commit a huge amount upfront. You can start small, only investing an amount you’re comfortable with, and then use that investment as an opportunity to learn.

• Diversify across asset types— you might think about combining real estate, MCAs, and even collectibles to spread your risk. 
• For instance, you could put $500 into fractional real estate and $100 into a startup through a crowdfunding platform

3. Understand the Costs

Alts can often come with unique fee structures. Some platforms charge management fees or take a percentage of profits, and some don’t.

• Always review the fee breakdown to know exactly what you’re paying. Looking at the FAQs of different platforms can help you here.
• Remember: low fees mean more of your returns stay in your pocket.

4. Learn As You Go

Investing in alternative assets also gives you a chance to grow your knowledge. Take advantage of educational resources to get more comfortable with this type of investing.

• Good platforms will offer free webinars, guides, and articles to help you make more informed decisions.
• Quizzes can be a fun, interactive way to learn more about investing in alternatives. Try this one here to discover which alternative asset best suits you. Or this quiz to learn about your own risk appetite. 

5. Focus on Your Interests

Start with what excites you. 

If you love the idea of supporting small businesses, MCAs or crowdfunding might be a good fit. If real estate interests you, fractional ownership could be a great first step.

Mistakes to Avoid as a New Investor

Starting your investment journey is exciting, but avoiding common pitfalls can save you stress and money down the road. Here are 3 common mistakes to watch out for:

1. Overcommitting Funds

It’s tempting to dive in headfirst, but never invest money you might need in the short term. Before committing, make sure you’ve set aside an emergency fund—enough to cover three to six months of living expenses.

To learn more about making an emergency fund, click here. 

2. Ignoring the Risks of Illiquidity

Some alternatives, like real estate or private equity, can tie up your money for months or even years. Always check the lock-up period for your chosen asset to make sure it fits with your financial goals.

For example, if you’re saving for a trip abroad next year, a 12-month investment might be fine, but a 5-year private equity fund isn’t.

3. Overlooking Market Volatility

Alternative assets like cryptocurrencies can experience sharp price swings. While these kinds of investments might offer you high returns, they aren’t for everyone—especially if you’re uncomfortable with risk. 

Always assess your tolerance for volatility before investing.

What Can I Do Now?

Alternative assets can provide new investors like you with an exciting way to diversify portfolios and grow your wealth.

Starting small, experimenting with accessible options like fractional real estate or crowdfunding, and learning as you go could set you up for long-term financial success.

Ready to take the next step? Explore our free resources to learn more about alternative investments, or take one of our interactive quizzes to discover more about your own unique investing style. 

Start building your portfolio today and take charge of your financial future!