You’re probably not relying on a single stock or mutual fund to carry your entire portfolio. That would be reckless, even in a highly stable market. Spreading your capital across multiple asset types helps reduce exposure to volatility, and more importantly, gives you a shot at preserving wealth during economic shifts and difficulties. But diversification doesn’t mean just mixing tech stocks with energy stocks or bonds. What you ideally want in your portfolio are traditional investments mixed with non-traditional tools. In other words, you want at least some alternative assets.
Why? Because traditional portfolios built solely on equities and fixed income don’t always deliver when inflation runs hot or markets move sideways for quarters at a time. This is the biggest reason why an increasing number of investors (especially high-net-worth individuals and institutional players) have started treating them as core components rather than fringe hedges.
What Counts as an Alternative Asset?
Broadly speaking, alternative assets include everything that doesn’t fall into the usual buckets of stocks, bonds, or cash equivalents. As you can probably guess, real estate, private equity, hedge funds, venture capital, collectibles, cryptocurrency, and commodities all qualify. Some are newer and more niche than others. Others, like precious metals like gold and silver, have centuries of history as reliable stores of value.
Gold and silver remain two of the most widely held and easily understood alternatives. They’re tangible, relatively liquid, and resistant to currency devaluation. Silver, in particular, pulls double duty as it’s a precious metal with historical value and an industrial material with real-world utility. And you’re not limited to bullion or ETFs. Understanding junk silver— which is pre-1965 U.S. coins with high silver content—gives you access to a physical asset with built-in liquidity and a low barrier to entry. There’s a reason many investors call it “real money”.
Why Investors Allocate to Alternatives
Low Correlation with Public Markets
When equities sink, alternative assets often move independently or in the opposite direction. For instance, precious metals tend to rise during geopolitical instability and inflationary periods, when stock portfolios are under pressure. That lack of correlation makes them ideal for cushioning downside risk. Even a modest allocation to liquid alternatives (about 20%) can reduce portfolio volatility, according to data from the CFA Institute.
Inflation Protection
Your purchasing power erodes in real terms when inflation spikes. This is the time when traditional bonds and cash equivalents become liabilities. Commodities, real estate, and hard assets like silver, gold, or farmland usually respond better to inflationary pressure. Gold gets most of the attention here, but silver deserves a spot in the conversation. It’s more affordable, widely traded, and often less vulnerable to central bank manipulation.
Access to Higher Returns (Sometimes)
Alternatives like private equity or venture capital aren’t just about protection (although that’s a big part of it); they’re often about performance as well. They’ve historically outpaced public markets over long periods, though with higher risk and lower liquidity. Not every investor has access, of course, but if you’re accredited or working through the right fund, these assets can add long-term return potential. And even for those who aren’t chasing alpha through startups or leveraged buyouts, owning precious metals adds resilience and optionality without needing institutional credentials.
Use Alternatives to Play Offense and Defense
If you’re thinking about investing in alternative assets, don’t overcomplicate this: there’s no need to overhaul your entire portfolio overnight. Start small and increase as you go if you see success. Use them—especially assets like real estate, private equity, and precious metals—as tactical tools for building resilience.