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Fleming Financial Services Blog

At Fleming Financial Services, Inc., our role is to assist our clients in defining and realizing their financial objectives and goals. We work with our clients to implement personalized plans designed for their unique situations. Our areas of concentration are: Retirement planning, Estate and Wealth Transfer strategies, and Business Continuation planning. We emphasize the importance of conducting our business with integrity and professionalism. As a member of PartnersFinancial, an independent national financial services company, we are able to provide access to sophisticated resources for the benefit of our clients. Some of the professionals with our firm are currently registered to conduct business through NFP Securities, Inc. With those additional resources in place, we help facilitate the complex corporate and personal financial decisions our clients must make.

Beyond Traditional Asset Classes: Exploring Alternatives-Part 3

Thomas Joseph Thomas Joseph , 9/4/2014
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Fleming Financial Services, PA, InvestmentsCommodities and financial futures Commodities are physical substances that are fundamental to creating other products and are basically indistinguishable from one another.  Examples include oil and natural gas; agricultural products; livestock such as hogs; and metals such as copper and zinc. Commodities are typically traded through futures contracts, which promise delivery on a certain date at a specified price. Futures contracts also are available for financial instruments, such as a security, a stock index, or a currency. Though the futures market was created to facilitate trading among companies that produce, own, or use commodities in their businesses, futures contracts also are bought and sold as investments in themselves, and some mutual funds and ETFs are based on futures indexes. Futures allow an investor to leverage a relatively small amount of capital. However, they are highly speculative, and that leverage also magnifies the potential for loss. Art, antiques, gems, and collectibles Some investors are drawn to these because they may retain value or even appreciate as inflation rises.  However, those values can be unpredictable because they are affected by supply and demand, economic conditions, and the quality of an individual piece or collection. Fleming Financial Services, PA, Additional Investments Why invest in alternative asset classes? Part of sound portfolio management is diversifying investments so that if one type of investment is performing poorly, another may be doing well. As previously indicated, returns on some alternative investments are based on factors unique to a specific investment. Also, the asset class as a whole may behave differently from stocks or bonds. An alternative asset's lack of correlation with other types of investments gives it potential to complement more traditional asset classes and provide an additional layer of diversification for money that is not part of your core portfolio, though diversification cannot guarantee a profit or ensure against a loss. Tradeoffs you need to understand Alternative assets can be less liquid than stock or bonds. Depending on the investment, there may be restrictions on when you can sell, and you may or may not be able to find a buyer. Performance, values, and risks may be difficult to research and assess accurately. Also, you may not be eligible for direct investment in hedge funds or private equity. The unique properties of alternative asset classes also mean that they can involve a high degree of risk.  Because some are subject to less regulation than other investments, there may be fewer constraints to prevent potential manipulation or to limit risk from highly concentrated positions in a single investment.  Finally, hard assets, such as gold bullion, may involve special concerns, such as storage and insurance, while natural resources and commodities can suffer from unusual weather or natural disasters. ©2013 Broadridge Investor Communication Solutions, Inc. All rights reserved.