In today's economy investing is a risky business and especially if you're using stocks or bonds. The value of these can change on a daily basis and leave you with a loss. Alternative investments are an alternative way to invest and thus are proving to be very popular in recent times. The change of value is usually a lot less drastic than normal stocks and they can be great to have in uncertain times.

Alternative investments are any sort of investment that has a low correlation with stocks, bonds and cash. A couple of examples would be natural gas and teak wood. To a small investor starting out these commodities will be widely available and would be a great starting point if you're seriously considering an alternative investment. Although the return may not be as great as an ever changing stock, they can be a fantastic medium term solution to your investment portfolio.

One of the very first known alternative investments was rice back in the 1400's. It was used as a commodity and was traded for agricultural products or receipts. In the 1600's futures contracts were developed and ensured that parties would agree to deliver and pay for goods in the future that were actually agreed upon in the present. This was helped to soften the short troubles with supply and demand. In the 1800's the first form of pooled investments was invented. It's similar to today mutual funds and is the precursor to hedge funds. Today we have many different currencies which all trade at different prices. The most recent development was in 2007 where the first mutual fund has exposure to the managed futures market.

Nowadays in 2011 we have access to many different investments. Any market you can think of you can invest in. While hedge funds and venture capital are deemed to be alternative investments some don't consider it to be a true alternative and more of a diversification strategy. One of the truest alternative investments you can make is in natural commodities. Commodities are based on how the consumers are using them and how they are being transformed for other uses. For example commodities like teak wood are in demand due to deforestation and the need for them in flooring and construction. Due to major reforestation plans in Brazil and a growing demand it's likely to see this commodity rise slowly over the years. This investment also won't be affected that much by the economy as the demand to build wooden floors and have it used will still be there.

However some issues with alternative markets is that it's hard to tell the true value of the asset as there are less reports freely available. Since many alternative investments may be new (such as renewable energy sources) it may be a bit harder to look at the historical data and see how they have performed in the past.

For investors diversification is key in tough economic times and can lead to some great success.

Select Global is a market leader in alternative investments and provides investors with many opportunities to invest in eco friendly commodities. http://www.select-global.com

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