How Lifestyle Assets and Alternative Investments Work in a Well-Diversified Portfolio

“In choosing a portfolio, investors should look for a lot of different types of investments and be ready to ride out the bad times as well as the good.” (Harry Markowitz, author of Modern Portfolio Theory)

Lifestyle investments include eco-estates, renewables, private equity, vineyards, and art collections. Investing in these types of assets can not only help your portfolio grow but also add cultural, emotional, and even lifestyle value.

What exactly is a lifestyle asset?

Lifestyle assets are investments that can make you money but which also have personal value or usefulness. Common examples are:

Wine farms and vineyards. South Africa’s wine heritage still draws buyers from around the world and opens up export opportunities. If you can’t afford a whole farm, a sought after bottle of wine can also be an excellent investment.
Art and collectables. The markets for African art are growing around the world, and rare collectables often go up in value over time. Fine art doesn’t have to be super pricey either – especially if you have a good eye.
Eco-estates. Everyone needs somewhere to live, but eco-estates are increasingly seen as more than just housing. They combine sustainability, security, and lifestyle appeal. Rising demand is driving their value upward, positioning them as both practical homes and smart investments.
Classic cars and other collectables. Hard-to-find assets can hold their value and be fun to own. If you know what you’re doing you might even unearth some hidden gems.

And what about alternative investments?

Some investments don’t enhance your lifestyle but they can still make good investment sense. Examples of alternative investments include:

Private equity and venture capital, which help businesses grow and come up with new ideas all over Africa, can deliver great returns.
Infrastructure projects, especially those that involve housing, transportation, and renewable energy are popular at the moment.
Hedge funds and commodities are meant to give returns that are different from those of stock markets.

These types of investments can have interesting effects on portfolio performance, especially in places like South Africa, where demand for new ideas and infrastructure is high.

How do these assets help with diversification?

One of the best things about lifestyle and alternative investments is that they usually don’t move in the same way as traditional stock markets. This protects you when the market is stressed.

Tangible assets like property, art, and commodities can retain their value during periods of inflation. What’s more, illiquid assets often offer the potential for higher long-term returns, a phenomenon known as the illiquidity premium. Lifestyle assets also have non-financial benefits, such as enjoyment, legacy value, status, and bringing family together.

The bottom line

Lifestyle assets and alternative investments shouldn’t replace traditional holdings, but they can strengthen and diversify a well-built portfolio. They showcase your values and help you build cultural and legacy capital, while also protecting against inflation and spreading your investments.

South African investors can make money and improve their lives by adding lifestyle and alternative assets to a diversified long-term strategy, as long as they plan carefully, do their homework, and get professional advice.

Keen to start thinking out of the box with your portfolio? Drop us a line…

Jason Yutar: +27 83 415 9603 or
Zaheera Mohammed: +27 82 775 1898

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.

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