Alternative investments

Race horse? 'Buy to let'? Fine wine? Deciding where to invest can be tough. Jonathan Reuvid, editor of the Handbook of Personal Wealth Management, has some tips

• Don't dabble in equities, exchange traded funds, traded options, futures, hedge funds and the like by yourself unless you are a professional. You will probably lose money.

• Invest instead through a professional portfolio manager, if
your funds available are substantial and you wish to invest
in financial products. 

• For those with less capital but still favouring stock market
investments, consider those eligible for Enterprise Investment Scheme (EIS) tax concessions, venture capital trusts (VCTs) and adding to your SIPP.

• If you are more comfortable with assets you can see and touch, be careful of UK residential property where the market outside London has eased and of 'Buy to Let' investment while interest rates are rising. Investigate real estate investment trusts (REITS); they could be a smart investment but are unproven.

• Overseas property investment is attractive but choose your experts and schemes carefully. Commercial forestry investment has a good long-term track record.

• If you already have investments of these kinds and don't need additional income, think about those you can live with and enjoy where there is an opportunity for capital gain. Coloured diamonds and some sectors of the art and antiques market are good stores of value. Alternatively, follow the Chinese and go for gold.

• Racehorse ownership and bloodstock investments will give you days of relaxation and innocent enjoyment but may prove dangerous to your financial health. With knowledgeable partners and under expert management, syndicated investments can be highly profitable.

• Selective investment in fine wines can yield striking capital gains while giving you the opportunity to drink part of the profit.  First and second growth Bordeaux wines are in most demand. Be sure to choose a reputable wine merchant, buy your wine in unmixed sealed cases and store under bond to defer duties and taxes.

• If you fancy yourself as a judge of promising entrepreneurs and have the time to advise and monitor progress, consider investing as a 'business angel' in someone else's venture. But remember that the failure rate is high and be sure that your co-investors are compatible.

• Before planning your personal investment strategy, think through your aims. Decide how risk averse you need to be and get the balance right between prudence and investments that are
interesting or enjoyable.

Jonathan Reuvid is the editor of Handbook of Personal Wealth Management, published by Kogan Page