Attractive Alternative Investment:
“An attractive alternative investment (AAI) is a financial asset that does not fall into one of the conventional equity/income/cash categories and at the same time can be classified as a hobby/collection.”
A savvy, standard, and modern-day investment portfolio should incorporate ETFs, stocks, and mutual funds.
Age, income, health, and net worth all come into play when deciding what to invest in and how much to invest. We prefer a portfolio of all ETFs representing the best sectors of the market and the global market (i.e., QQQ, SPY, IJR, VWO).
ETFs consist of dozens of stocks in the same industry. They have low risk, good to significant gains, and low fees. While many financial advisors recommend ETFs, they also put their clients in what we call Dull Alternative Investments (DAI). These include oil, gold, private debt, etc. DAIs are dull and lack massive, double-digit growth.
Not maximizing your investment dollar is a costly mistake. In our opinion, that could cost an investor hundreds of thousands of dollars.
What do we suggest? We recommended 80% of your portfolio be in ETFs. The other 10% to 20% should be what we call Attractive Alternative Investments (AAI). Our favorite AAIs include baseball cards, video games, and sneakers.
You might be thinking we’re joking. Is it April Fools? No sir. We would like to introduce you to the fabulous world of Attractive Alternative Investments (AAI) and keep you out of the world of Dull Alternative Investments (DAI).
Dull Alternative Investments
DAIs: oil, gold, silver, private debt, hedge funds, or venture capital.
We’re not the biggest fans of traditional alternative investments and own only a tiny amount (gold ETF and oil ETF). DAIs are boring, but the annual return on investment on DAIs is very soft over the long haul.
Dull Alternative Investments Pros
- Safe/less risk.
- Low fees.
Dull Alternative Investments Cons
- They generally have a low return on investment (ROI).
- They are BORING.
Occasionally, one of them may have a great few years (e.g., oil in the early 2000s). However, on average, the ROI associated with these investments is far less than stocks and ETFs.
Well, what about Hedge Funds? Indeed, they beat the stock market average (which is a super large ETF). However, you would be incorrect. According to Investopedia.com, “Hedge funds have always had a significant failure rate. Some strategies, such as managed futures and short-only funds, typically have higher probabilities of failure given the risky nature of their business operations.”
Furthermore, according to a Capco study, 50% of hedge funds shut down because of operational failures. The bottom line? Do not invest in Dull Alternative Investments.
Attractive Alternative Investments
Let’s take a closer look at Attractive Alternative Investments.
AAIs: Trading cards (sports cards), sneakers, artwork, first edition books, Pokemon cards, video games, toys, NFTs, sports memorabilia, peer-to-peer lending, comic books, luxury watches, crypto, and luxury handbags.
As you can see, many of these investments are considered hobbies to some. Often, when the word “sports card investment” is used in a popular baseball card forum, you get the predictable “my baseball card collection isn’t an investment!” or “you must invest in Bitcoin too.” Not only are baseball cards (sports cards) an investment, but they are a dang good one, providing massive gains as of late.
Recent Success for AAIs
From 2017 to early 2021, AAIs exploded in value, providing unbelievable gains. You may not believe the following, but it is 100% accurate:
A PSA 10 graded Michael Jordan Fleer rookie card had a mind-blowing 46,000% ROI in 11 months between March of 2019 to January 2021.
Similarly, although not as significant, gains took hold in all of the AAIs. Compare a 90 Wata graded Super Mario Brothers value in 2017 to 2021, or given the same time frame, check out a 1st edition Ninja Turtle grade AFA 85 ROI from 2019 to 2021. They had a four-digit return on investment, no doubt.
From 2019 to 2021 and even today, AAIs seemingly make headlines every day. Still, some chuckle at collectors and snarkily explain that it’s bound to go down saying things like “Get out while you’re ahead.” or “This four or even five-digit ROI cannot and will not continue.”
However, we expect AAIs to beat DAIs by a wide margin when it comes to long-term gains. Plus, AAIs may even give ETFs and the stock market a run for their money in the long term. In conclusion, we advise investors to dedicate 10 to 20% of their investment portfolio to alternative investments—the attractive kind.
Stocks 80%/Attractive Alternative Investments 20%
For instance, let’s say your current portfolio is all 90% ETFs and 10% gold (our top-rated ETFs are QQQ, SPY, IJR, INCO). You could quickly eliminate the gold and scale back another 5 to 10% on ETFs. Without gold, the portfolio would have a juicy 15% to 20% towards attractive alternative investments.
Ideal Current Portfolio Holdings
- ETFs: 70% (QQQ, SPY, INCO, IJR).
- Trading cards: 20% (mostly rookie cards from HOF players).
- Sneakers, toys, and video games: 5% (Air Jordans, Ocenaria of Time, Castlevania, Leonardo First Edition TMNT).
- Cash: 5%
Note: Almost all trading cards are either PSA 10 or BGS 9.5 grade. Video games are all graded by WATA. AFA grades Teenage Mutant Ninja Turtle and most other toys.
Where to Purchase Attractive Alt Investments
#1. eBay is ideal for purchasing alternative investments as there are vast numbers of both buyers and sellers.
#2. StockX was founded in 2020 and is an online buying/selling platform much like eBay. While they’re not nearly as big (yet) but seem to have a bright future.
#3. Heritage Auctions is best for luxury items and high-end customers. They specialize in coins, comics, currency, art, luxury handbags, sports memorabilia, wine, historical articles, books, real estate, and video games.
#4. PWCC Marketplace bills itself as “The Largest, Most Complete Trading Card Marketplace In The World” and has a massive following. From what we can tell, eBay lost 30% of their trading card inventory when PWCC got kicked off the eBay platform.
#5. Bob’s Watches is THE spot online to buy a used or new Rolex. Bob has been around forever and recently got a nifty website upgrade.
If you would like to know more, please email firstname.lastname@example.org for any questions, comments, or advice regarding Attractive Alternative Investments.