| Alternative Investments, so-called, are usually | | | | NASD series 7 securities licenses and become |
| "products" put together, "packaged", andmarketed | | | | registered investment advisors (RIA)thus enabling |
| by large investment banking firms to those | | | | them to be compensated through so-called "wrap" |
| customers identified as "qualifiedinvestors". | | | | accounts which charge ahefty percentage of assets |
| The classification of qualified investor usually means | | | | under management (usually 3%). A registered |
| someone whose annual incomewas at least $200,000 | | | | investmentadvisory firm, not affiliated with a |
| per year for the past two years and expects at | | | | brokerage firm, usually charges 1%. Quite |
| least that amountfor the current year or has a net | | | | adifference, wouldn't you say? Whom would you |
| worth of at least $1,000,000 not counting their home. | | | | prefer to manage your money? |
| Whenever the term qualified investor appears, "alarm | | | | However, there are forms of alternative investments |
| bells" should be going off inyour head because the | | | | that do not require a largecapital expenditure. It |
| term usually means large amounts ofmoney involved | | | | would be more aptly described as direct participation |
| in very risky non-liquid investments. In other words, | | | | in abusiness activity. Because it qualifies as a business |
| you canexpect your money to be tied up for a long | | | | activity, there are significanttax advantages present. |
| time! | | | | Due to the low capital investment required and high |
| They are also "loaded" with fees and commissions | | | | profit margin,the potential return on ones' time and |
| for the firms "pushing" them. In fact,that is the | | | | investment can be considerable. |
| primary reason they are created. | | | | Donald Trump, the real estate magnate, while |
| You may have noticed, many of the recent scandals | | | | appearing on a television show, was askedwhat he |
| in the financial services industryinvolved alternative | | | | would do if he suddenly lost all his wealth. He said |
| investments. | | | | that he would get involvedwith a good networking |
| In this age of on-line discount brokerage firms, the | | | | company. The audience burst out laughing but Donald |
| days of making big money in stockbrokerage | | | | Trump said, |
| commissions are long gone and never coming back. | | | | "Go ahead and laugh, but that's why you're out there |
| Today, commission income has given way to fee | | | | and I'm up here! |
| income. Many securities salesmen have givenup their | | | | |