Nathan Hawrot | Dec 25 2025 14:00

Long-Term and Alternative Investments: Growth Potential and Higher Risk

Long-Term and Alternative Investments: Growth Potential and Higher Risk

This is the third post in our series on investment options. Long-term and alternative investments often aim for higher returns but come with greater complexity, risk, and liquidity challenges. These strategies can diversify your portfolio and help you pursue long-term goals like retirement or wealth building.

Real Estate

 

Description: Real estate involves purchasing property, such as rental homes, commercial buildings, or land, with the expectation of generating income or appreciation.
Example: Buying a rental property in Michigan for $300,000.

Pros and Cons: Real estate can provide rental income, tax benefits, and long-term appreciation. However, it requires significant upfront capital, ongoing maintenance, and can be difficult to sell quickly. Market downturns and property-specific risks also apply.

Historical Returns:

  • 3 years: ~6.0% (Depends on many variables)
  • 5 years: ~7.5% (Depends on many variables)
  • 10 years: ~8.0% (Depends on many variables)
    Inflation-adjusted: Generally positive across all periods but is dependent on many variables.
    (Source: Case-Shiller U.S. Home Price Index)

Collectibles

 

Description: Collectibles include art, rare coins, vintage cars, and other tangible assets purchased for potential appreciation.
Example: Investing $50,000 in fine art.

Pros and Cons: Collectibles can appreciate significantly and diversify a portfolio, but they lack liquidity, have uncertain valuations, and carry high transaction costs. Returns are highly variable and depend on market trends.

Historical Returns:

  • Data is inconsistent and varies widely by category; no reliable averages available.
    (Note: Collectibles lack standardized historical performance data.)

Commodities

 

Description: Commodities include physical goods like gold, oil, and agricultural products, often used as inflation hedges.
Example:$10,000 invested in gold bullion.

Pros and Cons: Commodities can protect against inflation and diversify risk, but they are highly volatile and influenced by global supply and demand. They do not generate income and can experience sharp price swings.

Historical Returns:

  • Gold (10-year average): ~1.5% annualized
  • Inflation-adjusted: Near zero
    (Source: World Gold Council)

Cryptocurrencies

 

Description: Digital currencies like Bitcoin and Ethereum offer decentralized, blockchain-based transactions and speculative growth potential.
Example:$10,000 invested in Bitcoin.

Pros and Cons: Crypto offers high potential returns and portfolio diversification, but it is extremely volatile, lacks regulation, and carries security risks. Prices can swing dramatically in short periods.

Historical Returns:

  • 3 years: ~45% annualized (Depends on many variables)
  • 5 years: ~70% annualized (Depends on many variables)
  • 10 years: ~150% annualized (Depends on many variables)
    Inflation-adjusted: Generally, highly positive, but past performance is extremely volatile and not indicative of future results. Also, very dependent on the individual cryptocurrencies themselves.
    (Source: CoinMarketCap; note extreme variability.)

Alternative Investments

 

Description: Includes private equity, hedge funds, and venture capital, typically reserved for accredited investors.
Example:$250,000 invested in a private equity fund.

Pros and Cons: Alternatives can offer high returns and diversification, but they require large minimum investments, have long lock-up periods, and carry significant risk. Transparency and liquidity are limited.

Historical Returns:

  • Private equity (10-year average): ~10% (Depends on many variables)
  • Inflation-adjusted: Generally Positive (Depends on many variables)
    (Source: Preqin, Cambridge Associates)

Disclaimer

Returns sourced from Case-Shiller Index, World Gold Council, CoinMarketCap, Preqin, and Bureau of Labor Statistics CPI data. Individual results may vary. Past performance does not guarantee future results.

What Works Best for You?

If you’d like help reviewing your long-term strategy or building a financial plan, contact us at Sculati Wealth Management. We’ll help you make informed decisions that align with your goals.