A. Alternative investment is a buzzword in the investment world lately. For different people, it could mean different things.
For most people, an alternative investment means something other than stocks, bonds or cash. In other words, something that is exotic, such as real estate, gold, previous metals or other commodities.
The Investment Company Institute (the trade association for the fund industry) defines a domestic equity alternative strategy fund as a fund that seeks "to provide capital appreciation while minimizing risk while employing long/short, market-neutral, leveraged or inverse strategies".
The reality is, an alternative investment could be simply something that you are not having right now. For example, if you currently put all your money in a cash account, an alternative investment could be stocks or bonds. Whatever you do, just remember this basic investment principle - invest in a diversified and low cost portfolio, regardless how it is called.