[Editor's Note: This is a guest post from facial plastic surgeon D. J. Verret, MD, FACS. In it, he describes his experiences with accredited investments. He gives seven tips to help you make sense of this complicated area of investing. We have no financial relationship.]
I read the December 13, 2015 article on accredited investing with great interest as I have started using some accredited investments to diversify a part of my portfolio. I have to admit that I have some investments where I have lost everything, some which are progressing nicely, and some which have paid off with over a 100% return in less than 2 years. When I started investing in accredited or high risk investments, it became obvious that there are many different kinds of investments, different methods of investing, and no standard method for evaluating the investments. With that in mind, I’d like to share my thoughts on investing in high risk investments.
# 1 Only use money that you don’t mind losing – completely
When I started practice, I made a plan for investing in retirement. Every year, I stick to the plan and only use money that is available after I have made my retirement investments to invest in high risk investments. This way even if I lose all of the money in high risk investing, I will still be on track for retirement. If some of my investments make money – the retirement timeline will accelerate.
# 2 Invest and forget
Even if your investments are successful, investments in high risk equities are illiquid. This means that unlike the stock market where you can buy and sell on a whim, you will not be able to get your money out for months or even years, if ever. While I keep track of my investments and interact with the companies in which I invest on a regular basis, I maintain a separate accounting of high risk investments. This way, the money invested is not included in my retirement planning or yearly budgeting.
# 3 Evaluate the investment for yourself
When you evaluate an investment, don’t assume that anyone knows how to evaluate the investment better than you do. The worst loss that I experienced in high risk investments is one that seemed good and was backed by a physician friend of mine. He sold me that he had previous investments that made him lots of money and that this investment was a ‘no-brainer’. Unfortunately the ‘no-brainer’ quickly turned into a ‘no-gainer’ and I’m still waiting to see my initial investment returned.
High risk investing is high risk because the returns are never guaranteed. Even with the best analysis, there are a million reasons that the investment may not turn out the way that you want. Talking to people with more experience in investing is always helpful. Having a ‘business’ mind examine the potential investment is a great idea. Unfortunately even the best business plan can run into unexpected turbulence. Ultimately you will have to invoke a leap of faith and decide if the potential reward is worth the risk of losing everything, or potentially more.
The evaluation that you will make of an investment will depend on the type of investment that you are making. Real estate investments require a different skill than technology start up investing. Some opportunities will be in successive funding rounds for development or production stage companies. These evaluations will be different than an evaluation of an expansion opportunity in a company with a fiscal track record. Partnering with more experienced industry investors can give a leg up but does not always guarantee success.
# 4 Stick with what you know
With a scientific background most doctors are best served by investing in scientific endeavors. As a general rule, if you are pitched an idea that doesn’t sound right, it probably isn’t. If you can’t understand a business, then don’t invest. While there are many variables that will determine the ultimate success of a business, it all starts with a good idea. In medicine (outpatient surgical centers, imaging centers, urgent cares, free standing EDs etc), you may be able to quickly tell if something is a good idea or not. The rest of the diligence will be a bit more difficult.
# 5 Assume worst case scenarios and if you can live with it, do it
Always assume the worst and if the best happens you will be pleasantly surprised. If you make an investment that is limited to the amount of the investment and will not require additional capital investment, then if you can lose that amount of money consider the investment. If there is any doubt that you can do without the money, skip the investment. There will be another one right around the corner.
In some investments, like real estate, there may be added unexpected expenses. The returns on a commercial real estate property look great if the property is completely rented and the tenant is responsible for all expenses, a “triple net” situation. But what if you lose a tenant and have to replace the roof on the building so the remaining tenants will stay with you and pay for the finish out for a new tenant. Those costs can quickly add up. Always calculate your financial responsibility in an investment assuming worst case scenario. The last thing you would want is to lose your stake in a long term lucrative real estate venture because of a short term liquidity problem.
# 6 Talk to an attorney
Most investment documents are not negotiable but there is no such thing as a standard investment so you will want your attorney to look over any document before you sign anything or invest any money. Investments are full of potential liabilities depending on the nature of the investment. Even limited liability partnerships can be ripe for taking advantage of the limited partner. While you think you may be investing a set amount in a company, the investment documents may require additional capital investment or allow the company to take on additional loans that you are responsible for. If you are considering investing $10,000 or more in a company, the couple of hundred dollars an attorney will charge to review documents is well worth it – just consider it part of the investment and calculate the cost into your investment return calculation.
# 7 Diversify
Just like any investment, high risk investing is best done with diversification. Because most investments require significant capital outlay and are illiquid, meaning you can’t readily get your money out of the investment if you need it, it may take several years to diversify a portfolio. Look for ‘fund of fund’ opportunities. Programs have sprung up across the country that take startup companies and provide on the job business education, funding, and connections. Some of these programs, called incubators, look for ‘mentor investors’ who not only provide capital which is then invested in a number of the sponsored startup companies like a mutual fund but also provide industry expertise to help the companies become successful. Other crowdfunding websites have been developed that not only allow for investment in individual companies but also into funds which are run by the website sponsors and invest in multiple investments featured on the sites. While you may not have as much control over the specific company investments, you will have a more diverse portfolio that is being vetted by a more dedicated diligence team.
While this article may seem to put a negative spin on accredited investing, I am a strong proponent of maintaining a portion of your investment portfolio in accredited investments. Consider that from 1928 to 2014, the S&P 500 produced a compound rate of return of 9.8%. But according to a report by the Kauffman foundation, angel investors they studied had an overall 2.6 times return on investment within 3.5 years although 52% of the investments lost money. The take home message – you will likely be successful if you are cautious and diversify. With those numbers, the rate of return for the accredited investor is 3 times the return for the S&P 500!!!! In future articles, we will look at how to maximize the probability of success in high risk investing.
What do you think? Do you invest in accredited investments? How have they worked out for you? Was it worth the additional risk, hassle, and illiquidity? Comment below!
Interesting post, I have never really thought about high risk investing before. The fact that he only puts in money after his other retirement / financials are met makes a lot of sense for this
Would not touch with a 10 foot pole
+1
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Most of these items aren’t really possible.
It’s next to impossible to truly evaluate these deals. People who push them are better at selling then you are at sniffing it out. Transparency is always questionable. You are very unlikely to know that much about it even if it’s medically related unless you are an older doc. Lawyers who actually know this stuff cost thousands and not hundreds of dollars. There is so little diversification that using that phrase is inappropriate. Using services gets you costs but track records on diligence vs selling you aren’t great.
The true parts are reward can be higher and don’t use money you can’t lose.
This article may get a lot of negative feedback given the forum that it is posted on and your readership profile. However, this is a very well written post and very important for high earners to understand. You can’t understate the fact that high risk investments should be done with money after your retirement savings, not with your retirement savings. But, “high risk” investments, often times have very handsome payouts. Taking extra risk, especially early on can dramatically affect when one becomes financially independent. I use a similar method as Dr. Verrett and have thus far seen very good returns. For me I have used 4 completely different “high risk” investments along side my retirement portfolio. 3 of those have seen well over double digit returns over the past 4-5 years. One of those is doing horribly and at this point will likely end in a just sub-total loss. I didn’t properly predict the oil market crashing the past 2 years. Either way, the other 3 investments have already paid for the 1 poor returning investment in the past 2-3 years and there is still a chance the poor returning investment could do well over the long term. If you have extra money, you could spend it, put it into low risk investments, or put it into high risk investments. If you don’t have “extra money” then you probably shouldn’t be reading this post anyways.
Exactly. Well said.
This remark from Napoleandynamite, “… But, “high risk” investments, often times have very handsome payouts….” seems inaccurate to me, a CPA serving hundreds of high income and high net worth clients and watching their finances over decades.
My personal observations are that high risk investments* rarely* pay off… as opposed to *often* pay off.
What may happen, however, is that when they do pay off, they pay off big. (They should.) An old well-known example easy to Google I’m sure: RockVen’s $1M investment in Apple grew to $100M investment by time they realized gain or could realize gain. But the family’s venture capital probably lost money on nearly all of the dozens and dozens of other $1M investments it make in the same period.
I assume, I should say, that Napoleandynamite probably means something like,
When a high risk investment does pay off, if it pays off, it often has a very handsome payout.
I agree with that.
Stephen,
Part of my statement was to put “high risk” in quotations. The reality is that many people reading this site consider anything outside of index funds “high risk”. I mentioned oil in my post, real estate is another venue that is considered by many to be “high risk”…as is “day trading” as is investing in a local business (brewery example above or Jim’s surgery center example below). “high risk” could also be venture capital investments or biomedical startups etc. I would call these “ultra high risk”. I wonder if this is what you are referring to? Even though the ultra high risk investments can pay out the likelihood of a payout is very small. However, many of the “high risk” investments have a very high likelihood of success and just need backing money to come to fruition. Usually this means a significant chunk of change (50K minimum), which many do not have to use as “play money”. Some people have this extra money, and can do quite well with some extra vetting and education. Also, many of us do not have the option of investing in 250K of tax sheltered funds like WCI does. (If I could put away 250K into tax sheltered accounts I wouldn’t put much if anything into high risk investments) So, as a whole you may be right that the average doctor does not do well investing in “high risk” investments. But the average doctor also doesn’t follow a simple retirement plan and invest into basic things appropriately. So I would suggest some of what you are seeing has to do with bad decisions by the people investing, not necessarily the idea of investing in “high risk” areas.
I think you are right… Sorry. In my first read of this post and thread of comments, I think I used a definition of ” high risk ” that’s different than some have used here. Let me therefore try to do a better job of explaining my thoughts.
First, as background, I kind of think we want to look at these deals not using an IRR but using a NPV. We want, in other words, to focus on the dollar profit we earn after adjusting for both the time value of money and the riskiness of the investment. Sometimes after we do a NPV calculation, these small deals look quite a bit less attractive. 22% IRR sounds great for example… but making an $8K NPV if you’ve got to fiddle around a bunch? Maybe not so much… This is a technical point, but maybe useful to some reader.
Second, a more general point: Though I work with many successful small businesses (because I have a big S corporation tax practice), no kidding, rarely do I see a small business owner who successfully invests in other active small businesses. The problem with small-time active businesses usually is there isn’t enough profit in the non-owner-financed deal to generously pay the CEO of the venture and pay passive investors a delicious ROI. As other people noted, the model that really makes this work is the traditional VC formula. But those arrangements are based on way bigger opportunities and entail way more competition for deals.
A third related point: Really talented entrepreneurs quickly accumulate either their own capital or develop networks that give them access to substantial capital. So it’s counter-intuitive to me that someone with a really good deal who’s really talented needs outside investors. Sure, that has to happen some of the time. But I think less often than one might expect. To make this math really easy, a business that makes $1M may “only” cost the buyer $2.5M… but an experienced savvy buyer can often get $2M of financing from the bank. And this savvy buyer probably has access to $500K either personally or through his or her family. So I don’t think outsiders get into these deals. BTW, you can scale these numbers up or down and they still hold true.
Fourth, and echoing one of your points, I do think that possibly the term “high risk” has different meanings to Dr. Vetter and some of the commenters. So people may not be diverging that much here afterall. I would say, e.g., that moderately leveraged real estate (especially if someone does this more than once and so learns the lay of the land) isn’t really high-risk. I think I made this point, sort of, here: https://www.whitecoatinvestor.com/ten-tax-loopholes-for-active-real-estate-investors/
P.S. Congratulations to any of you including D.J. Vetter who have successful done true, high-risk investing. You are in a very small club.
The biggest “risk” to these investments is high fees, low liquidity and non-transparency. With that combination you simply cannot win after taxes.
Beware of any investment that appeals to your sense of superiority or expertise.
Cannot is a bit strong. Makes it a very high hurdle, yes. However, this is basically a venture capital style investing attitude. You spread your bets out among as many different possible ideas as you can, fully expecting the majority to go completely bust. Some meander, and if you’ve done well, one or two might explode making up for everything else.
Obviously, most doctors are not even close to this level of financial freedom let alone sophistication, but thats different than saying its impossible. The issue is most of us dont have enough money to be able to afford to lose it in the first place, let alone spread it out among enough businesses that you get that statistical outlier.
For example one of my partners friends is now retired after giving cash infusions at a seemingly 100% loss over the years to a small start up business that eventually did well enough for him to get great results. Obviously not typical.
Zaphod says what I tried to say with more eloquence and clarity.
Sound tips, Dr. Verret. Thank you for sharing your insights. I would be interested in hearing more specifics about the actual investments you have made. Which worked and which didn’t, etc… another guest post?
I’ve made a couple high risk investments, both with money I could afford to lose, both in breweries. I followed #4 as craft beer is a beverage and industry I’ve become quite familiar with.
The first was 5 years ago, a small ownership share, and after some rocky early times, we are on pace for 5,000 barrel production and a nice profit this year. The second is in the planning stages, and is a debt deal similar to the crowdfunded real estate offerings. The return won’t be that good even if it succeeds, but I’m helping a young guy and small community out, and I negotiated free beer for life as part of that deal.
Altogether, the 2 investments represent about 1.5% of my portfolio, well under the 5% “play money” I’ll allow myself to invest outside of my bland Vanguard index funds.
Best,
Physician on FIRE
Thanks for the comment. I’d be happy to discuss offline. Feel free to email me drverret at innovationsfps.com.
That sounds kind of awesome actually. How do you even find someone who wants to start a brewery but is looking to sell “ownership shares” as you state?
One of the founders was the president of the Hospital Board of Trustees. I was on the Board. Maybe the only perk of being on the Board.
If you make friends in the industry, local brewmasters / brewery owners, etc… you’ll hear about other startups looking for funds. I missed out on a great one about four years ago at a time that wasn’t great for me – I was in between jobs with a lot of things up in the air.
I’m not sure this is the best time to get involved with a startup brewery. The market is getting more and more saturated. 5 or 10 years ago would have been a better time. But, if people continue the Eat Local, Drink Local trend, there could be room for many more local and regional breweries.
Best,
-PoF
I liked WCI’s post about how accredited investments are not necessary for great returns. “The Donald” would be signicantly richer had he stayed away from real estate. http://fortune.com/2015/08/20/donald-trump-index-funds/
This is not quite accurate as one cant simply live off an index fund and get the total return as if it was left untouched. These articles all fail to state the obvious that his projects were throwing off cash flow, were super tax advantaged, and that the index fund would never have grown so large had he been drawing it down to fund his lifestyle as he does it.
This is a point discussed in depth in the paper, “The Myth of Dynastic Wealth,” available here for free:
http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2015/9/cj-v35n3-1_0.pdf
That was a good long read. Synposis: 1) Wealth is created by hard work and spending less than you make. 2) Generational wealth is only maintained if future generations learn and apply #1.
Respectfully suggest a third item for your synposis… 3) Almost no family succeeds at learning and applying #1.
The problem is that if they were good investments with a high likelihood of success, then the wealthy venture capitalists would have invested in them, and not offered the opportunity to you. So you are going to get either the investments that the experienced people didn’t want to invest in, or investments in projects that are being run by your friends and neighbors, or most likely, investments that are targeting physicians.
Sometimes that is the case but other times the opportunity is just too small to Internet VC or it doesn’t meet their niche criteria. Also as a doctor you have information and a way of thinking that is different and sometimes reveals opportunity. Some of these markets are not 100% efficient.
I agree with WealthyDoc’s post. Today there are various tiers of investments. Crowdfunding websites have opened a new realm of opportunities for accredited investments. Some of the investments may be in very early stage companies or low dollar investments that venture capitalists are not interested in. As physicians, opportunities may also be present in healthcare focused companies, like surgery centers, sleep labs, etc, where physician investment and participation are necessary for business success.
One other issue: If you invest in a business, or in leveraged real estate through your IRA, you are subject to UBIT (Unrelated Business Income Tax). Many syndicators do not disclose this (many do not even know about it). This tax can be punitive – as high as 40% Federal and 10% State on income over $12,300. (With real estate syndications, the attraction is often gains sheltered by depreciation for several years, followed by a large capital gain when the syndication is liquidated. With UBIT up to 50% of that capital gain is paid in tax.)
Interesting post. Can’t say I’d be excited about doing similar – definitely don’t have the extra $ at this time. But I do think we all need to be getting more vigilant about these type of investments because there are a lot of crowdfunding developments that are bringing accredited investor opportunities to larger audiences at power buy-ins. Some of this sounds cool, but all the caveats mentioned above still apply.
typo: power=lower
I think this is an important topic. I have invested in surgery centers, commercial real estate, a private technology company, a small private manufacturing company, imaging centers etc that all required me to be an accredited investor. Being an accredited investor doesn’t mean you know what you are doing – just that you can lose a lot of money without being financially devastated. I have had outstanding appreciation and cash flows so far. I am primarily a passive index investor so don’t bash me too much here but the side investments pay much more. My income from these “other” investments from last year alone was in the 6 figures. My IRR varies from 20-40%. My biggest investment had a return of 33% for the 6 years I was involved. Nothing to sneeze at. I know there is risk and luck and cost and survivorship bias etc…. but some can do very well with well chosen investments even if it isn’t for everyone. These investments accelerated my ability to become a millionaire within 6 years of starting practice in debt.
I’m an investor in a heart hospital and the returns have been excellent so far. My wife will be investing in a new ambulatory surgery center. Similar to Dr. Verret, we’re doing this after fully funding our retirement accounts, with money that would otherwise be going to a taxable investment account.
How does one gain access to these investments though? How did you see these deals?
I no longer invest in this kind of stuff. As an accredited investor I have invested in a local hospital syndication and a surgery center with ok results. I became an angel investor and joined a local group. The deal meetings were confusing. I even have a MBA and they were confusing. I invested in a local startup that was going to manufacture a new type of incubator for neural tissue. They had a Harvard PHD and patents. The problem became clear when the PHD walked into a meeting a shot 6 people. I will stick with index funds. At least a brewery investment would be fun.
Wow. I remember that incident. Seems like some of these accredited investments require as much people reading skills as anything else as the right idea with the wrong people can end up poorly. In retrospect, were there any clues in their behavior or demeanor that you now realize? We own a small stake in a local surgery center, but didn’t need to be accredited.
She was obviously weird but I thought in an academic way not a homicidal way. Lots of of people thought the idea was sound. Manufacturing in China, patent protection etc. As her history came out there had been incidents in her childhood but no one knew about them prior to the investment.
So, what happened to your investment and the startup company?
The company bankrupted in about years. Tax loss last year.
I appreciate the article and wish there were more details about the investments that have been made. I agree, that for the vast majority of people, index funds is all you need/should use. The author’s approach to investing fun money is entirely appropriate. Not only can these type of investments be fun and exciting, but can be very lucrative. I have invested in multiple (approximately 15) accredited type investments over the past 20 years (real estate, debt to equity conversions and private stock)–all with the approach the author mentioned–I fund my retirement in index funds first and if I have some left-over money, it’s free game for more risky ventures. I have lost all of my money in 2 of these ventures (and probably a 3rd 🙂 ), a handful are doing well, but not entirely proven yet, but the remaining have been great, returning anywhere from 15-35%/year over many years. I fully agree with the comment stating that if it is really that good of an investment, why are they talking to me, but ultimately, many of these are small, early stage companies or real estate deals that large institutions/investors are not interested in. Many of these startups are not at the stage that they need or want private equity/venture capital money. They need bootstrapping money. I agree, you should never invest money that you are not willing to lose into a risky investment, but hey, it’s fun, I like it and it has paid off handsomely for me, despite the flops–much better average return than my index funds (however, may not hold true in the future). If it’s not for you, don’t feel bad about it, but those that do invest are not necessarily crazy either.
If you could truly stomach losing the entire investment, why not go to the roulette wheel and bet it all on black? You’ll know exactly what the risks and rewards are, as opposed to nebulous guesstimation.
How can you accept that these investments have higher risk than the market, but still think you have more control over them than the market? Seems like a paradox and an illusion to me.
Because roulette has an expected loss. You’re equating investing with gambling. Let’s take an example:
You are offered the opportunity to invest in a surgical center. You know for a fact the local surgeons are really angry with the hospital administration and would love to operate somewhere else. The surgical center will be owned by you and 5 of those surgeons. You have an estimate for the land, the building, and all the staffing costs. The surgeons have already committed to doing a certain number of cases there every month. You run the numbers yourself and the worst case scenario you can see you should make 20% a year, best case 100%. You’ll be buying it in a business structure and with a non-recourse loan that ensures you cannot lose more than your investment. How much do you invest?
No one is going to a venture capitalist. No one cares about how efficient the market is. You have a business proposition, you can look at all the numbers, and you can take the risk in return for what appears to you to be quite a reward. Is it possible that 5 years from now there will be issues with the surgical center? Yes. Could someone embezzle money? Yes. Could the structure of medicine in this country change? Sure. But the likely outcomes is that your returns from this venture will be significantly higher than what you expect from your index fund portfolio and even your rental properties. Now you get to make the call. Do you invest $100K? $300K? $500K? Or do you just stick with your index funds? Your choice.
But saying it’s roulette seems kind of silly as you review the documents and projections and walk the property yourself.
Very well written Jim. Couple of questions as I am very curious
1. Do you recommend the same as the OP is to invest only fun money into these ventures.
2. Has your belief changed overtime – as in – are you aggressively pursuing alternative investments instead of rock solid index investing style that you preach on the blog or book.
Thanks
Not sure if my last comment went through (webpage glitch?)
Jim, well written. I was interested to know
1. Do you still recommend only invest small/fun money in alternative investments.
2. After running this blog, and index investing message (books, blog), are you aggressively INCREASING alternative investment portion of your portfolio? For example looking for stake in surgery center etc? I ask because of attractive returns vs. Index portfolio as you mentioned.
Curious to know your thoughts.
1. I think the foundation, default and mainstay of your portfolio should be low-cost, broadly diversified stock and bond index funds invested inside retirement accounts. How much you want to branch out of that is up to you. Certainly it is not required.
2. Depends on how you define aggressively. I’m definitely aggressively increasing the amount of money going into index funds inside retirement accounts though. I like real estate and I like owning businesses so I expect to do more of that as the years go by I suppose. But every investment is an individual opportunity that must be evaluated on its own merits.
Hmmm, Jim is that your new investment you alluded to?
You’ll hear about it eventually.
Very curious about this Jim. Would you recommend increasing allocation to alternative investment such as in surgery centers or private businesses rather than index investing ? If so what is your asset allocation percentage to it/goal?
I think investing in low-cost, broadly diversified index funds inside tax-advantaged accounts should be the default, baseline option for everyone. It is easy, low-cost, and it works.
Do I also think it is okay to evaluate and possibly invest in other opportunities in addition to that? Absolutely. I do not have an allocation specified to that nor a goal. I certainly wouldn’t put more than perhaps 10% of your net worth into any one project no matter how good it looked.
Thanks WCI.
May be I’ll clarify, I was thinking more of a % allocation combined of alternative investments. Let’s say you invest in real estate or surgery center all of those combined investment income would be 10% of the figure and the rest of 90% is in the market. Something like that
Absolutely – more than 10% of your portfolio in a single venture ? It better be your own business !
I don’t think you can really come up with any type of definite guideline. Some people are probably comfortable with 100% while others wouldn’t be comfortable with 5%. I wouldn’t expect to ever have more than 25-33% I suppose and probably not even that much.
Agree. Being a guest in a casino means the odds are stacked against you. Being a prudent investor means the odds are stacked in your favor. It isn’t a guarantee. People aren’t good at thinking in a probabilistic way. I have been through multiple investment projects similar to what WCI outlined here and they have all paid very well. I felt more than adequately compensated for the risk I took.
I have investment in Fund of Hedge Funds and it has not been worth the illiquidity, the late K-1, the state sourced income, etc, etc. Looking forward to getting my $$ back.
Those are good points. In 2015 I received an erroneous K-1. The new K-1 came after I had filed my April taxes requiring an addendum. I also had received income from 4 states due to commercial real estate developments requiring state tax filing in many states. The record keeping and paperwork can be a hassle for those who are not so OCD.
Interesting essay and far more interesting comments.
Here’s my take on this. As physician’s, we all make good incomes. If we max out our retirement plans, live below our means and follow a low cost investment strategy of indexing fixed income and equity funds, we will all end up with a nice nest egg for retirement. Its not very complicated.
I retired at 55 with a very nice nest egg without investing in “fringe” investments that may bring high returns or much loss. Slow and steady wins the race. My portfolio of retirement accounts and taxable accounts now approachs $9 million dollars.
If I want to gamble and take on risk, I will catch a Southwest flight to Las Vegas for a weekend of fun. Don’t take chances with promises of high returns in non-traditional investments, YOU DON”T NEED TO!!
“High Risk Investing” can mean a lot of different things. Much of this conversation focuses on venture capital investing, which is about as high risk/high reward as it gets. A broader term that is used in the investment world is “Alternative Investments” This includes private equity funds, real estate, energy, and other things that don’t fall neatly in to the stocks and bonds categories. Some of these investments are less risky than the stock market and can diversify your portfolio. However they can be complex and illiquid, and they can involve substantial fees. My point is that all of these investments should not be lumped into a single “high risk” category.
Granary Canyon! I remember doing that one in the middle of the winter and a number of the anchor points being under ice.
I have invested in several accredited investments this year for the first time. Some of the minimums were a bit high at 50K but most were around 5K. All of it is in crowdfunding sites like RealCrowd, Patch of Land, and PeerStreet. I have tried to be diligent in reading the contracts and have passed on a few of the opportunities that didn’t use an outside accounting firm to audit the books annually. Its too early to tell how it will turn out. I’m a bit nervous about the complexity of my tax returns. Predicted returns range from 10-25%, we’ll see how close realitiy is to predictions.