Diversifying your investments outside of Pharmaceuticals and Biotech is important to do. When there are downturns, recessions, depressions, or possibly regulatory events that might cause the industry to decline, having investments outside of the life sciences may allow you to sleep better and reduce the potential losses.
Diversifying with Real Estate
Real Estate is a common way people diversify. For some, the house they live in is enough, but I wouldn’t count that as an investment. Personal residences are necessities and become a liability and not liquid.
Some alternatives are real estate investment trusts (REITs). Many are publicly traded on the stock market where they can be bought and sold throughout the day using a brokerage account. These trusts have a portfolio of properties that they manage with the profits being distributed to the share holders.
Another way is by becoming rental real estate owner. BiggerPockets.com is a huge community of agents, brokers, lawyers, landlords, flippers, and financiers of real estate. Through their multiple podcasts, newsletters, and extensive forums, the wealth of knowledge is prominent. Despite what they say, the upfront investment and risks can be high.
Crowdfunding real estate loans is one method to get exposed to the real estate market. Through Groundfloor (referral link), you can choose what financing deals you want to invest into.
Diversifying With Art
In my passings, I have heard of crowd-purchasing famous artwork into Masterworks. It works by them selecting what artwork to purchase, purchasing it under a single-use LLC, then filing an offering circular with the SEC to sell shares of this company to you. After a couple years, they sell the artwork distribute proceeds appropriately. They charge 1.5% annual fee, paid as equity, and a 20% of future profits. That’s similar to a hedge fund performance fee.
I’m hesitant myself as I’m not sure how liquid these shares are. Masterworks hosts a secondary market, where shares can be bought and sold with more frequency.
Diversifying with Startups
Investing into startups can be another way to diversify, but also a way to loose it all. Startups are risky as they are early-staged companies looking to get product market fit. Wefunder is a kickstarter for startups. There you can invest $100 or more into a variety of startups. If the startup hits their fundraising goal, the investment materializes. if not, the money is returned to the investor.
Now, if you have more technical expertise and want to invest and can invest greater amounts of money, Stonks and Angelist are two ways.
Stonks, available to accredited investors only, is a platform where startups can do live demos and presentations virtually. It presents itself to be a very interactive experience between the potential investors and the founders. For the most promising ones, it can feel like being on Shark Tank.
AngelList has multiple methods of startup investing available. First, you can join a syndicate where curated deals get sent to you. There’s no commitment to invest in these deals, and you can pass on the ones that don’t interest you. Second, you can join Rolling Funds. This works by making a commitment to one of the funds, say $10,000 for 4 quarters. This fund will then investigate, and employ the capital raised into promising startups. Some Rolling Funds have different initiatives, like The W Fund, a fund looking to invest only into founders that are diverse or women-led.
We are EngineeringPharma.com are not financial advisors and are not providing financial advice. This is just our opinions. Please consult with a financial profession to discuss your full financial situation.