WHAT ARE ALTERNATIVE INVESTMENTS ? A BEGINNER'S GUIDE TO ALTERNATIVE ASSETS
- KidVestors
- 4 days ago
- 4 min read
What you'll learn:
When you think about investing, chances are the usual suspects come to mind: stocks, bonds, maybe real estate. But did you know there’s a whole other world of investments beyond the “traditional” ones? These are called alternative assets and they can be just as exciting as investing in art, as unusual as wine or sneakers, and as futuristic as cryptocurrency.
Alternative assets are becoming more popular because people want new ways to diversify their money. Let’s break down what they are, how they work, and how KidVestors makes them fun and approachable for the next generation.
What Are Alternative Investments?
Simply put, alternative investments aka alternative assets are investments that don’t fall into the usual categories of stocks, bonds, or cash. They’re called “alternative” because they exist outside of the traditional financial system most people are familiar with.
They often:
Have higher risks
Can be harder to buy and sell quickly
Sometimes require a longer investment timeline
Offer the chance for big rewards if chosen wisely
Examples of Alternative Assets (and What They Mean)
Here are some of the most common types of alternative assets:
Private Equity & Venture Capital
Investing directly in private companies or startups. Instead of buying shares on the stock market, you’re backing businesses before they go public.
Hedge Funds
Pooled investments managed by experts who use advanced strategies. They’re usually only available to wealthy or “accredited” investors.
Commodities
Raw materials like gold, silver, oil, or even agricultural products. Commodities are often used to protect wealth when traditional markets are shaky.
Collectibles
Tangible items like art, rare coins, baseball cards, classic cars, or even limited-edition sneakers. Their value comes from scarcity and demand.
Cryptocurrency & NFTs
Digital money (like Bitcoin and Ethereum) and digital art or assets (NFTs). They’ve exploded in popularity but can be very volatile.
Real Assets
Things like farmland, timber, or infrastructure projects. These often provide steady long-term returns.
How to Invest in Alternative Assets
You don’t have to be a millionaire hedge fund manager to get in on the action anymore. Here are some ways everyday people invest in alternative assets:
Fractional Investing Platforms – Apps that let you buy small shares of artwork, real estate, or even collectibles.
Crowdfunding – Websites like WeFunder or Kickstarter where you can invest in startups with relatively small amounts.
Direct Purchase – Buying a rare collectible, crypto coin, or piece of art outright.
Funds – Some companies pool money from many investors to buy alternative assets, like REITs (real estate investment trusts) or crypto ETFs.
Pro tip: Always research before diving in. Many alternative assets carry higher risk, and they’re not always easy to cash out quickly.
Best Place to Hold Alternative Investments
Where you store your alternative assets depends on the type:
Crypto & NFTs → A secure digital wallet (cold storage is best).
Collectibles → Safe storage like vaults, safety deposit boxes, or climate-controlled rooms.
Private Equity & Hedge Funds → Usually through specialized investment firms or fund administrators.
Precious Metals → A trusted custodian, depository, or home safe.
Real Assets (farmland, timber, etc.) → Managed through partnerships or custodianship agreements.
Some retirement accounts, like self-directed IRAs, allow you to hold certain alternative investments. These can be tax-advantaged, but they come with more rules and complexity.
Alternative Investments vs. Traditional Investments
Here’s a side-by-side look at how alternative assets stack up against the classics:
Feature | Traditional Assets (Stocks, Bonds, Real Estate) | Alternative Assets (Crypto, Art, Commodities, etc.) |
Liquidity | Easy to buy/sell (high liquidity) | Often harder to sell quickly (low liquidity) |
Accessibility | Available through most brokerages/apps | Sometimes require accreditation or special platforms |
Transparency | Clear pricing in public markets | Harder to value, less regulated |
Risk | Moderate to varied | Often higher and unpredictable |
Diversification Role | Core of most portfolios | Used to add extra diversification |
Pros | Easier access, more regulation, steady returns | High growth potential, unique opportunities |
Cons | Returns may be lower or slower | Harder to access, higher risk, less liquidity |
Think of traditional assets as your “meat and potatoes”—steady and reliable. Alternative assets are like the spices: they make the meal more interesting, but you wouldn’t want to live on spices alone.
How KidVestors Teaches Alternative Assets
At KidVestors, we believe kids and teens should see the full picture of money, not just stocks and savings accounts. That’s why we’ve built alternative assets into our financial literacy journey.
Here’s how we make it fun and practical:
Interactive Simulations – Students explore what it’s like to invest in things like real estate, gold, or even digital assets in a risk-free environment.
Gamified Lessons – Topics like crypto or collectibles are explained with engaging videos, games, and real-world examples.
Culturally Relevant Examples – From sneakers to music royalties, we connect investments to things students already care about.
Rewards That Reinforce – With KV Bucks and real-world incentives, kids learn that smart diversification—including alternative assets—can build wealth over time.
By the end, students walk away with the confidence to understand when and why alternative assets might fit into a bigger financial strategy.
Alternative assets might sound complicated, but they’re really just “everything outside the usual investing box.” From crypto to collectibles, they bring risk, excitement, and opportunity to the table.
The key is balance: traditional assets build the foundation, while alternative assets add diversification and growth potential.
And thanks to platforms like KidVestors, kids and teens don’t have to wait until adulthood to learn about them. They can explore the concepts now so when they’re ready to invest later, they’ll already know how to navigate the world of both traditional and alternative wealth-building.
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