Investing in Non-Traditional Assets – What Is the Value of My Promissory Note?

What is the Value of my Promissory Note?

Traditional Investment Assets

Stocks, bonds, mutual funds, and exchange traded funds are examples of “traditional investment assets.
The value (price) of these assets is public information published daily. Their value may fluctuate by the hour, but it is always known.

Non-Traditional Assets or Alternative Assets

Alternative assets are not publicly traded. Their value (price) is not published and is not available from any central source. They are bought and sold individually, privately, with no public disclosure. Examples include real estate, commodities, rare coins, stamps, artwork, LLCs, and private promissory notes. Recently, the term has been used to refer to other asset classes such as private equity, venture capital, and hedge funds. An accurate valuation of these assets typically requires a third-party, professional appraisal report. There is no public pricing information available.

Liquidity

Liquidity means that an asset can be easily, quickly and inexpensively converted to cash. Alternative assets (non-traditional financial assets) are less liquid than regular assets. Therefore, investors considering alternative assets are investing into the future; liquidity is sacrificed.

Advantages

The main advantage of alternative assets is that they diversify an investor’s portfolio and offer higher potential yields. Since they are non-traditional investments, they do not move in the direction of the stock market and may, therefore, help a portfolio off-set market volatility. Also, due to lower liquidity, alternative assets are often mispriced and so offer opportunities for arbitrage.

Disadvantages

Due to its non-traditional nature, alternative assets are more difficult to add to a portfolio. Therefore, banks may charge an additional fee for holding the asset. Depending on the returns realized from the asset, additional tax forms may have to be filed. …

Read More…. by Lawrence Tepper

The post Investing in Non-Traditional Assets – What Is the Value of My Promissory Note? appeared first on Note Investing Seminars.

Investing in Non-Traditional Assets – What Is the Value of My Promissory Note? published first on http://www.noteseminars.com/
Investing in Non-Traditional Assets – What Is the Value of My Promissory Note? published first on http://www.noteseminars.com/