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If you have a desire to get involved with investing, you may not be sure where to start. When you look at traditional investments, it can be tricky to navigate the various stocks and shares that are available. These will have experienced a degree of turmoil thanks to Covid and the various lockdowns that the world has endured. Does this mean that 2022 is a less than ideal time to be starting your investment journey? Not at all.
Investing isn’t limited to the traditional channels. Koia is a new investment app that allows consumers to invest in alternative assets, such as whisky, wine, luxury watches and many more collectables. These are alternative assets that you already know and love, meaning you can invest with confidence. In this article, we’d like to share with you an overview of what alternative assets are and how you can start your investment journey with less cash than you may think.
What are alternative assets?
The first steps towards your investment journey involve learning all about alternative assets and what they actually are. One of the easiest ways to do this is to show you what alternative assets aren’t! In simple terms, alternative assets are those that don’t fall under stocks, bonds, or cash. If you have previously explored traditional investing, then you will have seen that it takes place on stock exchanges, with many of the biggest companies being included in indices such as the S&P 500, Nasdaq-100 or FTSE 100. Alternative assets fall outside of these traditional markets.
Alternative investments will often share at least some of the following characteristics:
- They have the potential for high returns
- Alternative investment options can range from relatively safe to highly volatile
- They are long-term, illiquid investments
- Access is traditionally restricted to professional investors
- Large minimum amounts of money is required to get started (although read on to see how to avoid this)
Perhaps an easier way to demonstrate what alternative assets are, is to provide some examples. Some of the most common forms of alternative assets include;
Real estate
Property has long been known as an investment opportunity that exists outside of the traditional stocks and shares. Those that invest in property often seek to benefit from the ongoing rental income as well as long-term equity growth.
Private equity
Investments into companies that are not listed on a stock market, because they are still private are called Private Equity investments. Investors backing early-stage companies are called Venture Capital investors. Many professional and retail investors have flocked to these markets seeking higher returns, such as those offered by high risk / high reward start-up companies
Fine wine and whisky
Wealthy investors have benefited from fine wine and whisky for generations. The issue with this, as an alternative invWealthy investors have benefited from fine wine and whisky for generations. However, unless you have lots of money to tie up, it can be very hard to get started if you are looking to buy whole cases of wine or casks of whisky, making it inaccessible to most people. Fractional investing, however, has changed all of that.
Luxury collectables
This refers to luxury items such as watches, cars, and even handbags. Popular luxury collectibles typically rise in price due to the high demand compared with the limited number of items available. This scarcity has resulted in rising prices and some great returns for owners.
Trading cards
If you remember Pokemon cards or football cards growing up as a child, then you’ll already know how much of a passion collectors have for these collectible items. This passion seems to have followed people into adulthood, with collectors chasing the most desirable first edition or GEM mint cards available in the market. Which can fetch hundreds of thousands of pounds.
NFTs (non-fungible tokens)
Digital currencies, such as Bitcoin and NFTs, such as CryptoPunks have become widely popular recently. Although a relatively new investment opportunity, there is plenty of interest and large amounts of money has flooded into these emerging asset classes.
How does fractional ownership work?
We mentioned previously that alternative investments have, traditionally, been inaccessible to many people. Previously, you needed significant amounts of money before you could start your investment journey. Fortunately, the advent of fractional investing has changed this.
One way of understanding how fractional ownership works is to look at some of the recent digital app-based investment platforms for trading shares that have popped up in the last year or so. These investment apps offer users commission-free trading, in an easy and intuitive way, allowing users to buy and sell shares at the click of a button. Critically, they offer users to invest in fractional shares. That means that if one share was worth $600, a user could buy a fraction of that by investing $10 if they couldn’t afford a whole share. This has helped democratise investing and make it easier for anyone to get started.
How Koia is different?
Koia takes fractional investing to the next level by fractionalising iconic assets so investors can get started with small amounts, instead of buying the whole asset. This means that rather than trying to find hundreds of thousands of pounds to buy a luxury collectable, such as a watch or classic car, you can invest a much lower amount and benefit from part ownership. Better still, Koia takes care of all the hassle, such as authentication, storage and insurance.
Pros and cons of fractional investing
If fractional investing sounds appealing to you, it is important that you are aware of both the pros and cons that are associated with this. Let’s take a look at what these are:
Pros
Accessibility
Thanks to the lower amounts that you need to invest, alternative investments become accessible to everyone. With Koia, you can start investing with as little as £50.
Diversification
No doubt we are all aware of the phrase ‘don’t put all of your eggs into one basket’. With fractional investing, you can spread your funds across a number of assets.
A hassle-free experience
As a fractional investor, everything is taken care of for you. All the headaches that you would normally get when buying collectibles outright are handled for the user. Meaning there are no concerns, as storage and insurance fees are taken care of as part of the fee when you invest in the app.
Liquidity
When Koia’s secondary market launches ,you will be able to trade fractions with other users. This means you could take profit or accumulate a bigger holding in the asset. Providing liquidity, to holders of fractions is something that non-fractional investors have never had access to before.
Cons
A lack of experience
If you purchased an asset outright, you could enjoy using it. Say you invest in a piece of artwork or a watch, if you had outright ownership you would be able to view the art or wear the watch, whenever you wanted to. This is not the case with fractional investing.
Choices are limited
If you are sourcing your own assets, you can purchase whatever you like. With fractional investing, platforms curate and present the assets which may not be of interest if you have a very niche interest. Koia does, however, have a community forum where users can request new assets.
Accessibility
Access to luxury, iconic collectibles has traditionally been only available to the super-rich and has remained inaccessible to everyday people. This has been due to a combination of needing a substantial amount of money, significant knowledge or having access to sellers of exclusive assets.
How does Koia help with alternative investing?
By choosing to work with Koia you are choosing to work with the experts in alternative investing. The service offered on the platform ensures that your journey into alternative assets is a smooth one. Some of the benefits include:
- Koia sources unique and rare assets for our members. We then verify their authenticity before acquiring them. This saves you time and hassle
- The assets are then fractionalised making them accessible to all investors
- All assets are stored on your behalf. At Koia, we take care of storage and insurance.
- Koia presents assets on our platform and allows you to invest
- Once the secondary market opens on Koia, users will be able to sell & trade their fractions to other users. Creating more liquidity on the platform.
To ensure that you get the most from alternative assets, why not explore everything that Koia has to offer?
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