How much you invest, what you invest in, for how long and at which risk level is all up to your personal & financial situation. You should never invest more than you can afford to part with, as you never know what is around the corner. This is not an effort to be a ‘doomsday alarmist’, it is just a fact of prudent investing.
Take the global financial crisis for example, as previously mentioned, alternative investments – such as the Credit Default Swaps (CDS) that were created by Dr Michael J Burry as an ‘alternative investment’, to bet against what 90% of the advisors in the markets were doing. And it came to fruition.
As such, mum and dad investors that couldn’t afford it were suddenly homeless, left without any retirement savings and having to go back into a job market, where there were no jobs.
Investing has peaks and troughs, and you need to be able to ride through them to get to your investment goals.
In short, if you are an investor that is just starting out, has little disposable income and savings, then educating yourself in shares and savings accounts is a far more responsible path than investing in a property investment fund, hedge fund or CFD. However, a managed fund may be a way forward, but it is all dependent on your liquidity, age, investment expertise and of course goals.
All of this and more will become clearer as we unpack each of the investment types, their features, advantages, benefits and of course pitfalls.