Hey everyone and welcome back.
You know how much we love to keep a close eye
on how the world of investing is changing.
And sometimes it feels like we're getting little glimpses
behind the curtain.
Like those scenes in old movies with the secret societies,
like hidden handshakes and whispers of untold riches.
Right, right.
Well, it's kind of like that sometimes.
But instead of a secret handshake,
it's data and knowledge that gets you in.
Absolutely.
Today we're going deep into ETFs and alternative investments.
Okay.
Buckle up because this is gonna be fun.
He's gonna get going.
So like imagine trying to buy a piece of a skyscraper.
Okay.
Like a decade ago.
Yeah.
You would need millions of dollars the right connections.
Right.
The whole nine yards.
The whole nine yards, yeah.
But now you can get exposure to a whole basket
of real estate properties.
Maybe even a tiny slice of that skyscraper
with just a few clicks.
That's right.
That's the power of ETFs.
They're like these little packages
that hold complex investments
and make them way more accessible.
Yeah.
And what's truly fascinating is how ETFs have evolved.
I mean, they've gone way beyond just tracking the stock market.
Right.
We're talking about ETFs that hold real estate,
private equity, even things like private loans.
Whoa.
These are what we call alternative investments.
And for a long time, they were really difficult
for most people to access.
So it's like, you know those investment opportunities,
I always felt totally off limits.
Like there's this whole world of wealth building going on.
Right.
But you need a sequel password to get in.
Yeah.
ETFs are kind of like cracking that code.
That's a great way to put it.
Yeah.
So you might be wondering what exactly
are alternative investments.
Yeah.
Essentially, there anything that falls outside
of traditional stocks and bonds.
Okay.
Think real estate private equity,
where you invest directly in companies
that aren't listed on the stock market.
Right.
Capital backing those brand new startups.
And even things like commodities or private debt.
For a long time, these investments were the playground
of the ultra wealthy.
I see.
But ETFs are changing the game.
Okay.
So I'm starting to see how ETFs fit into all this.
Yeah.
But how do they actually work?
Imagine a basket holding a collection of different assets
like stocks in a specific industry,
bonds from various countries,
or even pieces of real estate.
Okay.
And ETF, or exchange trade fund,
is basically a share of that basket
that you can buy and sell on the stock market,
just like any other stock.
Oh, so with ETFs, you're not investing
in a single company or bond.
Right.
They're investing in a whole collection of assets
all bundled up neatly.
Exactly.
Got it.
And because these baskets can hold a variety of assets,
they can now offer exposure to alternative investments.
Yeah.
Making them much more liquid.
Okay.
Meaning you can easily buy or sell them.
Right.
And that's a big, transparent meeting,
you know exactly what you're getting into.
So that's a big deal, right?
Because before, with these alternative investments,
you wouldn't necessarily know what you were getting.
It was kind of like buying a mystery box.
Yeah.
Okay.
So this is making a lot more sense now.
Good.
So we've got these alternative investments,
which used to be really hard to access.
Right.
Now, thanks to ETFs, they're more accessible,
more liquid and more transparent.
Yes.
That sounds pretty good, right?
It does.
But before we get too carried away,
remember that investing always comes with some level of risk.
True.
And even though ETFs make alternative investments
more accessible,
it's super important to understand what you're getting
into before you invest.
Right.
It's like that old saying,
if it sounds too good to be true.
Exactly.
Now, before you rush out and buy every ETF
with the word alternative in its name,
we need to understand the data behind these ETFs.
Remember all those secret societies we talked about?
Well, data is your key to getting in
and making smart decisions.
So it's not just about picking an ETF
with a cool sounding name.
Right.
We need to do our homework.
Absolutely.
It's all about being informed.
Think of it like buying a used car.
You wouldn't just hand over your money
without checking its history, right?
No way.
Same goes for ETFs.
Yeah.
You want to understand what's under the hood.
Okay.
So what kind of car history should we be checking
when it comes to ETFs?
You need to look at what the ETF actually holds,
how it's managed its track record, things like that.
Okay.
For example, liquidity is important.
This basically means how easily you can buy and sell the ETF
without affecting the price.
Got it.
Think of it like the difference
between selling a popular comic book
versus a rare antique.
Okay.
The comic book will likely sell quickly and easily,
but the antique might take a while to find the right buyer.
Makes sense.
That's liquidity.
So more liquidity is generally better.
Exactly.
You want to be able to get in and out of an investment
relatively easily.
Especially when dealing with alternative investments.
Right.
Which can sometimes be more volatile.
Okay.
Got it.
Volatility, liquidity.
What other data checkpoints should we be aware of?
Trading volume is another important one.
It simply means how much the ETF is being bought and sold.
Higher trading volume usually means
there are more buyers and sellers,
which can make it easier to buy or sell your shares
at a fair price.
And then there are things like bid ask spreads, which-
Hold on, hold on.
Bid ask spreads.
Can you explain that one a bit more?
Sure.
It sounds a little complicated.
Think of it like checking the price difference
between buying and selling a used car.
Okay.
A big gap between what someone is willing to pay the bid
and what someone is willing to sell for the ask.
Okay.
Means less liquidity.
You want those gaps to be small,
which usually means the ETF is more liquid.
Okay.
I think I'm starting to get the hang of this data stuff.
But let's be real.
Analyzing all this information can feel a bit overwhelming,
right?
It definitely can be.
But that's where things get really interesting.
Great.
Are you about to tell me there's a secret weapon
that can help us navigate all this data?
You could say that we're talking about AI machine learning,
all of those futuristic technologies
that are starting to play a bigger role
in the world of investing.
It's like having a super powered research assistant
helping you analyze the markets.
Whoa, okay.
Now we're talking.
Yeah.
How exactly can AI help us with all this data?
That's where we'll pick up in part two of this deep doc.
All right.
I can't wait.
See you back here soon for part two.
So as we were talking about before,
all this data analysis can seem a bit daunting.
Yeah, a little bit.
But that's where AI comes in.
Okay.
I have to admit the idea of AI
like helping me pick investments,
it's kind of blowing my mind.
Yeah.
But in a good way.
It's definitely a game changer.
Think of it this way.
AI can process and analyze huge amounts of data
way more than any human could ever handle.
Right.
And it can do it incredibly fast.
Wow.
It's like having a team of expert analysts
working 24 seven, crunching numbers
and spotting patterns that we might miss.
So instead of me like trying to read through pages
and pages of financial reports.
Right.
AI can just do it all for me.
It can definitely make things easier.
AI can analyze things like economic trends,
company performance, market sentiment, all of that.
And it can even learn and adapt
as new data becomes available.
So it's not just about like spitting out numbers.
Right.
It's about actually like understanding
what's happening in the market.
Exactly.
And making predictions based on that data.
Exactly.
It's about identifying opportunities, assessing risks
and helping investors make more informed decisions.
Okay.
I'm officially impressed.
Good.
But let's get specific.
How is AI actually being used with ETFs
and alternative investments?
Yeah.
What can it actually do for someone like me?
That's a great question.
AI is being used in a few key ways.
First, it can help investors select ETS
that align with their specific goals and risk tolerance.
Okay.
Imagine telling an AI powered tool
what you want to achieve with your investments,
how much risk you're comfortable with
in your investment timeline.
Right.
The AI can then analyze thousands of ETFs
considering factors like historical performance
expense ratios and even things like ESG factors.
We're calling ESG factors.
Yeah.
What are those?
They're really a way to evaluate how companies perform
on issues like sustainability, social impact
and corporate governance.
Okay.
More and more investors are considering ESG factors
when making investment decisions.
Right.
And AI can help sort through all of that data too.
So AI can help me find ETFs that match my values
and my financial goals.
Exactly.
That's incredible.
What else can it do?
AI can also be used to optimize portfolio allocation.
It can help determine how much of your portfolio
should be allocated to different asset classes,
including alternative investments
based on your risk profile and market conditions.
Okay.
So AI can help me choose ETFs
and decide how much to invest in them.
What about managing risk?
Can AI help with that too?
Absolutely.
Remember when we talked about earlier
how alternative investments can be more volatile?
Yeah.
Well, AI can help mitigate that risk
by analyzing market trends
and making adjustments to your portfolio as needed.
Okay.
Think of it like having a co-pilot
who's constantly monitoring the radar for turbulence.
Right.
And adjusting course to keep you on track.
So it's not just about picking the right investments.
It's about managing those investments over time.
Exactly.
AI can help with both.
It can monitor your portfolio,
identify potential risks,
and even suggest rebalancing strategies
to help you stay on course.
This is all starting to sound pretty futuristic.
It's like having a personal financial advisor
but powered by super intelligent algorithms.
Right.
But let's be real here.
Not everyone has access to those fancy AI powered tools.
Mm-hmm.
What about the average investor
who's just trying to figure things out on their own?
That's a great point.
Right.
While access to sophisticated AI tools
is becoming more widespread.
Yeah.
It's true that not everyone has them at their fingertips.
So what advice would you give to someone
who's interested in like exploring ETFs
and alternative investments?
Yeah.
But maybe it doesn't have access
to all the bells and whistles of AI.
I would say don't let that stop you.
Even without AI,
there's a ton of information available
to help you get started.
Remember, knowledge is power.
Right.
There are tons of resources online.
Offline.
You can read articles, listen to podcasts.
Yes.
Attend webinars.
There's so much out there.
Exactly.
And don't be afraid to ask questions.
Talk to financial advisors.
Connect with other investors.
Join online communities.
There's a whole world of knowledge
waiting to be explored.
So even if we don't have the latest AI tools,
we can still educate ourselves.
Yes.
Do our research and start exploring
these alternative investment opportunities through ETFs.
Absolutely.
It's about being curious,
being willing to learn
and taking control of your financial future.
I love that.
But with so many ETFs out there,
how do we know which ones are right for us?
Yeah.
I mean, where do we even begin?
That's where a little bit of strategy comes in handy
and that's what we'll be diving into
in part three of this deep dive.
Perfect. I'm already taking notes.
I'm going to wait to learn more.
All right. So we've talked about how ETFs are opening up
this world of alternative investments.
We've talked about AI
and all the data that's involved.
But with so many ETFs out there,
how do we actually choose the right ones for our portfolios?
Well, it's easy to get overwhelmed
when you're looking at all these different ETFs.
Yeah.
But just like with anything else, it helps to have a plan.
So what's on the ETF shopping list?
Well, it all starts with your investment goals.
Yeah.
What are you trying to achieve?
Are you saving for retirement?
Are you trying to buy a house?
Are you looking for passive income?
Okay.
Your goals are going to really influence
which ETFs are right for you.
That makes sense.
A 30-year-old investing for retirement
will probably have a different approach
than someone who's closer to retirement age.
Right. Time horizon's a big factor too.
If you have a longer time horizon,
you might be more comfortable with riskier investments.
Okay.
But if you need the money sooner,
you might want to go with something more stable.
So goals, time horizon, what else?
Risk tolerance is super important.
How comfortable are you with the ups and downs of the market?
Some people can handle a lot of volatility.
Yeah.
Others not so much.
Alternative investments can be more volatile,
even within ETFs.
So you need to choose investments that you're comfortable with.
Because not all ETFs are created equal.
Exactly.
Even if they focus on a similar theme or asset class.
See, we've got to look under the hood.
You really need to understand what you're buying.
All right. So let's say I've done my research.
And I have a good understanding of my own investment style.
I've narrowed down my choices to a handful of ETFs
that seem like a good fit.
Okay.
What's next?
That's where diversification comes in.
You don't want to put all your eggs in one basket.
Right. Right.
We've all heard that one.
Even if it's a very fancy, well-diversified ETF basket.
So how do we diversify within this world of ETFs
and alternative investments?
A good rule of thumb is to diversify
across different asset classes.
So don't just focus on real estate, for example.
Okay.
Consider ETFs that offer exposure to private equity
or private credit commodities.
Even things like infrastructure or renewable energy.
So it's about creating a mix of alternative investments.
That kind of complement each other.
Yeah.
And help to balance out the risk.
Right.
And within each asset class,
you can diversify even further by choosing ETFs
that track different indices or have different strategies.
It's like building a well-rounded team.
Each player brings their own strengths and weaknesses.
I like that.
And just like a good team manager,
you want to regularly review and rebalance your portfolio.
Okay.
To make sure it's still aligned with your goals.
So it's not just like set it and forget it.
Not at all.
Markets change, your circumstances change,
and your portfolio should reflect that.
Regular checkups are key.
Exactly.
That's been incredibly insightful.
Oh, good.
I'm glad.
I feel like I have a much better grasp
on how to approach ETFs and alternative investments.
I hope so.
But before we wrap up, what about the future?
Okay.
What trends are you seeing in the world of ETFs
and alternative investments?
Well, one of the most exciting trends
is the increasing use of technology,
particularly AI and machine learning,
to create more personalized investment strategies.
So it's like having a personal investment concierge.
Powered by algorithms.
Yeah.
Constantly working behind the scenes
to optimize my portfolio.
Exactly.
And as AI and machine learning continue to evolve,
we can expect even more personalization
in the world of investing.
It feels like we're on the verge of like
a whole new era of investing.
It really does.
Where technology empowers us
to achieve our financial goals.
Absolutely.
It's a really exciting time to be an investor.
I think we've covered a lot of ground today.
Yeah, we have.
We've explored the ins and outs of ETFs
and alternative investments,
the importance of data, the role of AI,
what the future holds for this really exciting space.
And hopefully we've inspired you
to keep learning and exploring.
Keep asking questions.
Yes.
The world of investing is constantly evolving.
So the more you know, the better.
Remember, knowledge is power.
And with the right information
and a little bit of curiosity,
you can achieve some pretty incredible things.
Absolutely.
Thank you for joining us on this deep dive
into ETFs and alternative investments.
Until next time, happy investing.