An alternative investment is an investment that is not a stock, a bond or cash. AIs may include real estate investments, promissory note programs, hedge funds, derivatives contracts and the like. AIs are generally privately traded products that should only be purchased by institutional investors or individual investors who have a high net worth. AIs are subject to less regulatory oversight and often generate higher fees for brokers. Also, AIs are generally illiquid, which means clients cannot easily sell the AI on the open market if they need to generate cash for an emergency.
