The digital revolution has brought changes to every aspect of life, not least the way in which we save and invest our money. Alongside the technological advances, the poor performance of traditional investments has added impetus to changing investment strategies, with more people looking outside the box for alternatives.
Is it time for colleges courses to reexamine the way they teach tomorrow’s investors about finance and investment and look beyond traditional stocks, shares and managed funds?
Out with the old
Since the global recession started to bite in 2008, the natural investment choices such as high-interest savings accounts, stocks and investment trusts have showed ever-diminishing returns. This has had a knock-on effect on pension funds and government bonds, leading people to explore less conventional options to make their money work harder.
Past generations have taught us that no investment is safer than bricks and mortar, and many have chosen property as an alternative investment. On the face of it, that is a sound decision – house prices continue to rise, and property can be quite literally better than money in the bank. But of course, not all of us are in a position to tie up thousands in such a long-term investment.
In with the new
In a bid to beat the system, the concept of alternative investments has become hugely popular over the past 5-10 years, as investors seek out anything that has a low correlation to the overall financial market. Online trading options have opened up more choices than ever, and today’s alternative investment possibilities include everything from venture capital and hedge funds to gold and bitcoin or even classic cars and rare wines.
These new investment types require a new approach to understanding risk and return. For example, if you are buying a classic car as an investment you need highly specialized knowledge in order to avoid a myriad of pitfalls. On the other hand, investing in gold as part of a balanced investment portfolio through a specialist agent such as Lear Capital is something that anyone can do and requires a quite different and simpler type of risk analysis.
Teaching the new paradigm
The whole area of investment strategy is broader and more complex than it has ever been. While the underlying concepts of risk versus return remain unchanged, both the technological methods for investing and the methodologies for understanding and assessing risk and return are vastly different across the diverse investment types.
Today’s finance courses need to embrace and consider these new dynamics to ensure that tomorrow’s investors are armed with the tools they need in the 21st Century investment environment.