Diversification

• One of the primary reasons people put money into alternative forms of investment is because they provide diversification. When you put all of your money into traditional forms of investment, the value of your portfolio could plummet when the economy experiences a dramatic downturn. By putting money into alternative forms of investment, it may be possible to get through adverse market conditions and still make money.
  
  

Superior Returns

• Some forms of alternative investment may give you better returns than you could expect from stocks and bonds. For example, some hedge funds regularly post gains that are significantly better than traditional mutual funds. Because the primary objective of investing is to grow your money, this makes alternative investments attractive for investors.
  
  

Comfort Level

• Some investors get involved with alternative forms of investment because they understand them better and are more comfortable with them. For example, the average person may not be familiar with stocks, but they may feel comfortable investing in a particular commodity or in real estate. This gives them something tangible in which to invest, instead of basing their investment decision on the price-earnings ratio of some company with which they are unfamiliar.
  
  

Types of Investment

• If you decide you want to get involved in alternative forms of investment, there are plenty of options from which to choose. You can invest in commodities such gold, silver, corn, oil and soybeans. You could invest in foreign currencies through the foreign exchange (Forex) market. You could invest in real estate or put money into hedge funds. You could choose to put money into a private equity fund and invest in new businesses that show promise.