Alternative Investments: Where They Can Fit Into Your Investment Portfolio

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I’ve always had a soft spot for gold. My grandpa, Frank LaBarge, was an avid collector of gold coins. His passion dates back to 1933, when President Franklin Delano Roosevelt forced people to sell most of their gold back to the government. Grandpa Frank did his best to keep some of his gold collection, allowing him to transfer his passion to the next generation — me. He would give me coins when I was a kid, and it felt like getting pirate treasure.

In times of economic uncertainty, like we’ve seen earlier this year, people get fearful and search for stable alternatives to the stock market. Bonds used to be viewed as an equity hedge, but recent turmoil has even led to volatility in the bond market. That’s led to a rise in popularity for investing in alternative investments like gold, real estate investment trusts (REITs) and residential real estate properties. But it’s also important to understand the monetary value each can bring to your portfolio, and the risks associated with them.

Owning physical gold remains as exciting for me today as it was when I was a kid, but even if the novelty of owning gold is fun, it’s also important to recognize its value in your portfolio. Gold is typically viewed as a hedge against the dollar, providing a stable investment when the stock market makes our heads spin. As some people tried to make sense of the stock market’s sudden volatility in early 2025, gold’s value jumped close to 40% and peaked at an all-time high of over $3,500 per ounce earlier this year. Meanwhile, the S&P 500 has grown by just over 10% over that same period.

However, more context shows that between 2012 and 2022, the price of gold increased by just $150 per troy ounce. Even though gold has been stable, it’s also historically been outperformed by the stock market.

REITs, which are real estate-owning companies you can invest in, are similarly seen as stable investments. While they have provided competitive returns and sometimes outpace the S&P 500, they’ve grown just over 5% in the past five years compared to the S&P 500’s 15% during that time.

Residential real estate market prices have risen at a rate of about 5% annually over the last decade, but homes aren’t as simple an investment as the stock market. They are complicated to purchase, require regular maintenance along with potential upgrades, and aren’t always easy to sell quickly if you need to access their value.

That’s not to say alternatives can’t fit into your portfolio, but it’s important to invest with a long-term growth strategy rather than chasing short-term gains. If you invest in alternatives, use what we know now about their price and historical growth and plan to stay invested over the long haul. Alternative investments may have their place in your portfolio as long as you have a clear purpose for them and plan to stay invested.

Near our office is an antique shop on Riggs Avenue. Occasionally, you’ll see me rifling through the shop looking for treasures, trying to recapture the magical feeling Grandpa Frank gave me as a kid. I still enjoy hunting for gold, whether it’s at an antique shop or buying a coin at the Annapolis Coin Exchange. But when it comes to understanding your portfolio strategy, it’s important not to let fun cloud your investment decisions. Working with a trusted financial advisor can help you understand your portfolio strategy and manage your risk tolerance as you approach retirement.

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Jason LaBarge, financial advisor and president of LaBarge Financial
7 Riggs Avenue, Severna Park, MD 21146
443-647-4321
www.labargefinancial.com

Securities offered only by duly registered individuals through Madison Avenue Securities LLC (MAS), member FINRA/SIPC. Investment advisory products and services made available through AE Wealth Management LLC (AEWM), a registered investment advisor. MAS and LaBarge Financial are not affiliated entities.

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