In recent years, alternative investments have surged in popularity, offering investors opportunities beyond traditional stock markets. These investments, which operate outside of conventional traded capital markets, span a diverse range of sectors including social loans, cryptocurrencies, infrastructure, biotech, real estate (both domestic and international), and renewable energy.
The growth of this sector can be attributed to the low interest rates that characterized global and Israeli markets in recent years – a trend that has since shifted. Alternative investments provided investors with additional portfolio diversification options during this period.
However, while these investments may offer potentially higher returns, they also come with elevated risks that often surpass those associated with traded securities. Investments in stock exchanges are based on prospectuses and updated information that companies are required to publish according to each country's regulations. In contrast, disclosure in alternative investments is less visible and unregulated, necessitating a thorough examination of the inherent risks.
Proper assessment forms the foundation for deciding whether to participate in such investments, alongside other critical factors. Among these considerations are the tax implications of the investment.
Tax aspect evaluations should account for the tax rates applicable to traded financial instruments on stock exchanges and the possibility of offsetting losses. Additionally, while stock exchanges typically operate continuously five days a week, alternative investments often have limited liquidity, with predetermined and relatively restricted exit points.
The current economic climate, characterized by high inflation and interest rates, demands a reassessment and appropriate balancing of investment portfolios, including those of households, while taking into account pension investments.
