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6 financial investment you didn’t know about
Learn about 6 financial investments you didn’t know about and diversify your portfolio.
The financial world never stops moving. New assets and investment vehicles are attracting the attention of investors who are looking to alternative financial investments to help diversify their portfolio even further. Below are 6 such investments you should know about.
1. Indirect investment in real estate
Despite the volatile climate, the real estate sector continues to grow, particularly indirect investment in the form of REITs (Real Estate Investment Trusts), which allow investors to generate income from real estate without having to buy it, as opposed to direct investment, which involves borrowing against the asset.
Indirect investment in real estate, usually through investment funds, is therefore an opportunity to gain exposure to the real estate market at a low cost, i.e. without having to expend capital. The rents of the properties that make up these investment funds are usually stable, which can lead to the stability of the fund itself and of its dividends.
2. Exposure to cryptocurrencies
Investing in cryptocurrencies has attracted the interest of many investors. It is not affected by inflation because these digital assets are not tied to a single currency or economy, nor are they intermediated by other entities. They are therefore more protected from political, social and economic crises, but on the other hand they are highly volatile and susceptible to fraud, such as that which affected millions of depositors in the FTX crisis.
There is no way to avoid these risks entirely, but there are best practices that can help guide investments. One is to invest in assets with some historical performance – if possible, in a market that did not exist until a few years ago. This is the case with Bitcoin (BTC), the most widely known cryptocurrency, and Ethereum (ETH), both of which account for more than 75% of global investments in this type of market. It is also possible to have exposure to these cryptocurrencies indirectly, within with a regulated institution, such as Banco Carregosa, through Crypto Fx. However, you can also invest in Exchange Traded Funds (ETFs) of companies that develop applications for cryptocurrencies, such as IBM or Nvidia, among several others that are emerging in the markets.
3. CFD (Contract for Differences)
As the name suggests, CFDs are an agreement between two parties to exchange the difference between the opening price of the contract and its closing price when the contract is closed our. You can trade CFDs on various underlying assets such as stocks, commodities, currencies or even indices. By investing in CFDs, you take advantage of the change in the price of the asset over a given period of time and profit from the difference – just like buying and selling any other asset.
Only in this case, and unlike traditional investments, you do not need to physically own the asset to get the desired effect, you only need to buy a CFD. The process is simple: the investor opens a position on an asset, betting on the rise or fall of its price. When the position is closed, the investor receives the change in the price of the asset. Due to the risk of loss involved, it is recommended that investments follow a clear strategy, taking into account the investor's profile, objectives and needs. It is a leveraged product and should therefore be subject to prior analysis and constant monitoring. You can learn more about this product by reading the guides provided by Banco Carregosa and you can even test your trading skills by using the simulation platform provided by the Bank.
4. ETF (Exchange-Traded Fund)
Exchange Traded Funds (ETFs) differ from traditional funds in that they can be traded on a stock exchange like shares of a company. They offer exposure to a wide range of companies and sectors, with high liquidity and low initial capital requirements.
Some of the most popular ETFs are linked to commodities, specific industries (such as energy or real estate), currencies or even inflation ("inflation-linked bond ETFs"). This means that they can benefit in an inflationary environment. They can also be leveraged, which means the ETF involves the use of leveraged products.
5. Hedge Fund
A hedge fund is a closed-ended vehicle made up of private investors whose money is managed by professional fund managers who use a variety of strategies, including leverage or trading in non-traditional assets, to seek above-average investment returns.
It covers alternative funds and is not generally available to the general public. Investing in this type of vehicle is often considered a riskier investment option and requires a higher minimum investment, assuming the investor has a larger net worth.
6. Green Bond
A green bond consists of financing environmentally sustainable projects, such as clean and renewable energy, water and energy efficiency, circular economy, biodiversity, land use or pollution control. In this case, there is a commitment to the precise use of the funds and the publication of a periodic report to inform investors about the progress of the projects and the expected impact of the allocation of funds.
This type of investment is booming, given the energy transition that is currently taking place worldwide. It is expected that as popularity grows, standards will be become more precise and the regulatory framework will be recognised at international level.
Banco Carregosa, solidity and security for your investments
Banco Carregosa has a team of experts ready to help you diversify your portfolio with investments in alternative assets, suited to the profile and objectives of each investor. Take advantage of our macroeconomic and strategic knowledge, as well as the extensive experience of our advisors. You can rest assured that your assets are in safe hands.