Alternative investments attracting the attention of the new generation of investors, let's understand them properly and get started

As the global financial markets rapidly evolve, many investors feel that stocks and bonds alone are no longer sufficient. Assets beyond traditional investment categories—such as cryptocurrencies, precious metals, artworks, and startup stocks—are emerging as key components of portfolios. In this article, we will explore the definition of alternative investments and practical investment strategies step by step.

What Are Alternative Investments

Alternative investments encompass all investment products excluding traditional financial assets like listed company stocks or bonds. These assets tend to have low correlation with existing stock and bond markets, making them advantageous for portfolio diversification, and with proper strategies, they can generate high returns. However, they are characterized by lower liquidity and less developed regulatory frameworks compared to traditional finance.

Overview of Major Alternative Investment Products

Commodity Investments

Gold, crude oil, agricultural products, and rare metals are highly effective alternative assets during periods of intense inflation. Their prices tend to rise alongside inflation. Various trading methods such as futures and ETFs are available, offering excellent diversification benefits. However, they are sensitive to supply-demand changes and international geopolitical situations, so market monitoring is essential.

Unlisted Company Stocks

Stocks of startups and unlisted companies appeal to investors seeking high returns. They offer the advantage of entering growth-potential companies at low prices in early stages, but liquidity is extremely limited, and trading procedures are complex. Additionally, it can take years to list, and failure to go public may render the investment principal worthless.

Cryptocurrency Market

Cryptocurrencies centered around Bitcoin and Ethereum have become assets attracting all investor groups. Highly traded cryptocurrencies are suitable for short-term trading due to their high liquidity and volatility, and they also serve as a store of value as digital assets. However, price movements can be irrational compared to traditional stocks, and some projects may be scams, requiring careful verification.

Art and Collectibles

Artworks, vintage wines, classic cars, and sports memorabilia also fall into the alternative investment category. Depending on the item, returns can range from hundreds of thousands to hundreds of millions of won, but selecting investment targets requires expert-level insight. Especially, purchasing items for resale can pose legal issues, so caution is advised.

Fractional Investment

This involves dividing a single asset into multiple securities for investment, allowing small-scale participation in high-value assets such as real estate, artworks, or music copyrights. As of 2025, financial authorities are expected to refine regulatory frameworks, making safer and more diverse products available. However, high fees and ownership disputes are potential risks.

Crowdfunding

This method allows small investments in various projects such as film and drama production, new product launches, and game development. Some platforms offer tangible rewards, allowing investors to experience the product first, and projects with high profitability potential promise high returns. However, it can take a long time to recover funds, and the risk of project failure is relatively high.

Attractions and Limitations of Alternative Investments

Main Advantages

Due to their low correlation with stocks and bonds, alternative assets provide excellent risk diversification. Assets like gold tend to retain value even during market downturns. They often offer high potential returns and serve as inflation hedges. They can generate stable cash flows even in low-interest environments, and investors who proactively capture current trends can achieve substantial profits. Additionally, the investment process broadens understanding of financial markets.

Key Risk Factors

Compared to traditional assets, alternative investments exhibit significantly higher volatility and uncertainty. Cryptocurrencies, commodities, and startup stocks experience large price swings. Liquidity shortages can cause substantial delays in selling, and demand surges may make trading impossible. Opaque information increases the risk of losses for those lacking expertise, and fees and entry barriers are generally high.

Practical Strategies for Beginner Investors

Information Gathering and Learning

The first step to success in alternative investments is a deep understanding of the asset class. Systematically learn the fundamental principles and latest trends of the targeted field, and accurately understand platform fee structures and service features.

Realistic Self-Assessment

Objectively evaluate your financial situation and risk appetite. If you prioritize stability, ensure you are prepared to handle stress from high volatility assets.

Start Small

Investing large sums solely because prices are rising can lead to significant losses during sharp declines. Begin with small capital to understand asset movement patterns, and gradually increase your investment as confidence grows.

Choose Trustworthy Platforms

Carefully review platforms for excessive fees, limited withdrawal options, and opaque operations, and use services with high reliability.

Maintain Portfolio Balance

In addition to alternative assets like cryptocurrencies and precious metals, include stocks, bonds, and cash equivalents to manage overall risk.

Clarify Investment Goals

If aiming for short-term high returns, startup investments may be unsuitable; for stability, precious metals might be better than cryptocurrencies. Set realistic goals aligned with your expectations.

Building a Healthy Investment Mindset

Maintain a Long-Term Perspective

It may take years to realize profits from startup investments. Even in short-term trading, pursue steady gains with a long-term outlook.

Stay Calm Amid Volatility

Avoid impulsive entries during rapid surges or panic selling during sharp declines to achieve your planned returns. Use pre-set stop-loss and take-profit orders to eliminate emotional reactions.

Avoid Herd Mentality

Following trends like NFTs without thorough analysis can lead to significant long-term losses. Understand macro trends but make investment decisions rationally.

Continuous Learning and Strategy Adjustment

The alternative investment market changes rapidly. Keep learning about your assets and adjust strategies as needed.

Develop a Loss-Minimization Plan

Recognize the characteristics of volatility and uncertainty, and prepare risk management plans in advance.

Conclusion

Alternative investments, with proper knowledge and cautious approach, are effective means to upgrade your portfolio. By studying various assets such as commodities, cryptocurrencies, and real estate in depth, and gradually entering according to your investment style, you can build a more solid asset foundation.