Alternative Investments
Three types of alternative investments to consider
In a recent post, we took a look at SME investments as an option for your portfolio – this time around, we’re going to explore three different types of alternative investments that you may also wish to consider.
Firstly, we need to explain what is meant by ‘alternative investment’ – and to be honest, this will vary to some degree depending on the advisor you speak to.
In a nutshell though, alternative investments are asset-based, but fall outside of the more well-known stocks, bonds, buy-to-let property and cash categories. Alternative investments can also be those that are strategically different to more traditional types and methodologies.
For some investors and advisors, an alternative investment may be assets such as fine wine, or peer-to-peer lending schemes. The type of investments you choose will ultimately come down to the amount you want to invest, your attitude to risk, your existing portfolio and the options your financial advisor lays on the table.
To help you get a broader view of some of the key alternative investments we can offer here at IW Capital, here are our top three…
Key alternative investments
Enterprise Investment Scheme
Introduced by the UK Government and designed to encourage investors to get behind companies considered to be higher risk, this shares-based scheme offers some pretty good benefits. These include no capital gains tax to pay on profits from the sale of your shares and income tax relief on 30% of your investment. To learn more, take a look at our Beginner’s Guide to EIS here.
SEIS – Seed Investment Enterprise Scheme
The SEIS is similar to the EIS, but with this type of alternative investment, you’ll be helping to shore up a new business start-up. They can only have been trading for a maximum of two years, employ 25 or less staff, and have less that £200k in assets.
This investment type can offer several tax benefits, but there are financial and time limitations on their receipt – but with 50% relief on any investment up to £100k and the option to carry ‘excess relief’ back for a year, the higher risk can bring tangible rewards.
Loan Notes
This type of alternative investment can be secured or unsecured, and is commonly used for investing in businesses with higher profit margins, who are able to offer a better rate of interest on your injection. They can be structured as either a qualifying corporate bond or as a non-qualifying one, with both being treated differently in terms of Capital Gains Tax rules and other potential benefits. These investments are only open to experienced investors or those with a high net worth.
Bespoke financial advice on alternative investments
Of course the intricacies of any investment type are difficult to provide in full in a quick-read article, and with so many things to consider when making such significant decisions it’s strongly recommended that you seek bespoke advice before parting with any funds.
Our team have extensive experience of alternative investments and assessing client portfolios to ensure any decisions are made according to all the essential criteria. So if you’d like to discuss any of the alternative investment options above to learn more about how they work – and how they could work for you – please get in touch and we’ll be delighted to help.