4 - Alternative Investments

Question 1

Problems with investing in art/collectibles

Answer 1

• High transaction costs (high spread between buying and selling)
• Don’t generate income, sometimes cost money to store
• High volatility (price depends on taste, supply & demand)

Question 2

Commodities

What is the difference between hard and soft commodities?

Answer 2

Soft commodities are goods that grow (e.g. coffee, wheat, sugar).

Hard commodities and mined or extracted (e.g. oil, gas, metals).

Question 3

Commodities

What methods can retail investors use to get invest?

Answer 3

• Exchange Traded Commodities
• Commodity funds
• Shares in commodity companies (e.g. mining companies, farming companies)