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Many women in tech are actively building wealth by investing in traditional areas like stocks, bonds, and real estate. However, alternative investments, such as venture capital, hedge funds, and private equity, have remained unexplored for most.
These assets offer opportunities for higher returns, portfolio diversification, and protection against volatility in traditional markets. Unfortunately, a lack of exposure or assumed complexity has pushed alternative investments to the background. Here are reasons why more women in the tech sector should consider this option.
What Are Alternative Investments?
Alternative investments are financial assets that do not fall under the traditional investment categories. Unlike traditional categories like stocks, bonds, and cash, these investments are usually illiquid, meaning they cannot be easily converted to cash.
Alternative investments are also typically not regulated by the U.S. Securities and Exchange Commission (SEC) or other regulatory agencies. As a result, they are mostly held by accredited individuals with high net worth or institutional investors.
These investments come in different forms and structures, giving investors greater flexibility to choose one that fits their goals. Since they correlate less with traditional investments, they help reduce overall risk. Women in the tech industry looking to explore alternative investments have various options. Depending on preferences and risk appetite, they can invest in assets such as:
Commodities
Real estate
Art
Private equity
Collectibles
Coins
Farmland
Managed futures
Hedge funds
Cryptocurrencies
The process of investing in alternative assets varies. While some require a lot of capital and research, others can be done with a few clicks. Commodity investments involve buying physical assets or investing through mutual funds or exchange-traded funds (ETFs).
On the other hand, private equity investments involve buying shares in a private company. Platforms like the Hiive private stock marketplace allow investments in pre-IPO stock, enabling women in tech to tap into emerging companies before they go public.
Why Should Women in Tech Consider Alternative Investments?
Alternative investments are gaining popularity among different investor groups for good reasons. They offer a solid way for women in the tech sector to close the gender wealth gap and secure long-term financial independence. Here are six reasons why women in tech should invest in alternative assets.
Empowering Startups Led by Women
Despite improvements, women still receive a tiny fraction of venture capital funding. So, women in the tech industry who invest in alternative assets can support women-led startups through venture capital and private equity, driving diversity in the industry.
Investing in female-founded tech ventures can be a great way to generate financial returns while fostering gender equality and innovation. Since female-founded startups outperform their male counterparts, these investments have solid chances of yielding returns.
Portfolio Diversification
Many women in the tech industry focus more on traditional assets like bonds and stocks. However, they can diversify their investments and add alternative assets to reduce risk and maximize returns. Since these assets perform independently, they protect portfolios from economic downturns.
Women can achieve a more balanced and resilient investment strategy by tapping into alternative investments. This way, they will protect their wealth while gaining access to new growth opportunities. Diversification is smart and important for long-term financial security.
Low Correlation to Conventional Assets
Alternative investments usually have a low correlation to traditional assets. As a result, they do not move in sync with other global markets. This is especially helpful during economic downturns when conventional assets significantly decline.
Assets like hedge funds, private equity, and real estate can provide stability and offer returns even in bad economic situations. Women in tech who want to build solid investment portfolios should invest in these alternative assets. This will reduce risk and ensure financial security despite market fluctuations.
Potential for Higher Returns
Alternative investments offer the potential for high returns. For instance, hedge funds, private equity, and venture capital investments can generate significant gains by exploiting high-growth opportunities not available to the public.
While they sometimes carry higher risks, they offer a unique chance for women in the tech sector to build wealth. Those who dedicate a section of their portfolio to alternative assets can benefit from this long-term growth potential.
Low Volatility
Alternative assets typically have lower volatility than their traditional counterparts, which are sometimes subject to market swings. Daily market fluctuations impact real estate, infrastructure, and private equity investments less, providing more stability.
This makes them a viable option for women in the tech sector trying to build wealth with less exposure to short-term risks. By adding these assets to their portfolios, women can protect themselves while ensuring financial security even during economic crises.
Direct Tax Benefits
Alternative investments often offer direct tax benefits that improve the overall returns. Most of these assets offer tax advantages such as capital gains deferrals, depreciation, and efficient income structures.
Real estate investors can deduct depreciation expenses and reduce their taxable income. Opportunity zone investments often offer tax incentives for long-term holdings. Women in tech can leverage these benefits to maximize their tax burdens and grow their wealth.
Passive Income Generation
Alternative investments generate passive income and allow women in the tech industry to grow their wealth without constantly monitoring the market. For instance, real estate investments and hedge funds can generate steady revenue through rental payments and profit distribution.
Unlike traditional assets, such as stocks that require active management, these alternatives are professionally handled. This frees investors from daily decision-making and allows them to focus on their careers, personal pursuits, and families.
Leveraging Tech Expertise When Investing
Most women in the tech sector already understand emerging investment trends related to new technologies. This knowledge places them in a better position to invest in decentralized finance, blockchain, and AI-driven innovations.
This knowledge advantage offers them access to high-growth opportunities that traditional investors may not have. For example, most women in crypto were already in the tech sector before branching into the field.
Endnote
Women in tech seeking wealth and financial freedom should consider investing in alternative assets. These help diversify portfolios, do not correlate with traditional assets, and offer the potential for higher returns. They also provide passive income and direct tax benefits, and serve as a means to support diversity and drive transformation.
