*Apta Investment Group does not provide financial, legal, or tax advice. We recommend consulting with qualified advisors before making any investment decisions.”
Ever wonder why the wealthy don’t worry about market corrections? The answer is found in a diverse portfolio. Back in 2022, when both stock and bond markets had double-digit declines, private credit delivered positive returns. This means that smart, wealthy investors continued to have steady cash flow, no matter what the market was doing.
You know an investment strategy is a good one when sophisticated investors consistently use it to grow their money in every economic cycle. Consider TIGER 21, an exclusive network of ultra-high-net-worth investors (at least $20 million). Their members do way more than just stocks and bonds. They set aside a big percentage of their portfolios to alternative investments. Even though many physicians are drawn to traditional 60/40 portfolios, these wealth creators have found a different approach.
The demanding nature of medicine leaves little time for physicians to actively manage their investments. They often end up choosing one-size-fits-all strategies. But the data suggests there’s a better path: alternative investments.
Alternative investments offer steady income streams, inflation protection, and tax advantages that complement a medical professional’s high income level.
Dr. Vasu Kakarlapudi, founder of Apta Investment Group, recognized these challenges during his career as an ENT surgeon. He successfully practiced medicine and built his investment portfolio at the same time. Now, he continues to practice medicine, and he also helps other surgeons with their real estate investments. Dr. Kakarlapudi has spent over 20 years helping fellow physicians understand their investment options. He helps people invest so they can practice medicine because they want to, not because they have it.
This guide explores what alternative investments are, which types may benefit physicians, and a framework for determining whether these strategies align with your financial goals and risk tolerance.
What are alternative investments?
Alternative investments are defined as any investment vehicle that isn’t a traditional stocks, bonds, and cash equivalents. These investments behave differently than stocks and may grow or fall in value at different times.
Unlike publicly traded securities that can be bought and sold daily, many alternative investments require longer holding periods. They may also have limited liquidity. This illiquidity may provide higher potential returns, but it requires careful, advanced planning. You have to have adequate cash reserves available to meet unexpected needs during the investment period.
Alternative investments often have higher minimum investment requirements, and they may be restricted to accredited investors (who meet specific criteria related to wealth, income, or financial sophistication). Physicians who meet these criteria may be able to access these investment opportunities that aren’t available to the general public.
It’s exciting to think about new revenue streams and long-term financial growth opportunities. If you decide to go down the path of investing in alternatives, you will need to know what your options are. Let’s take a look at several common alternative investments, as well as their benefits and risks.
Real Estate
Real estate represents one of the most accessible and understood alternative investments for physicians. This category includes direct property ownership, real estate investment trusts, and participation in private real estate funds.
Direct real estate ownership allows investors to generate rental income while potentially benefiting from property appreciation over time. Medical office buildings and multifamily properties are particularly popular among physician investors, thanks to their stable cash flows and inflation-protecting characteristics.
Real estate investment trusts are an option for investors who want a more passive approach to investing, because they can hand over management responsibilities to a knowledgeable and experienced trust fund manager.
The benefits of real estate investment include:
- Receiving steady income through rental payments
- Potential tax advantages through depreciation
- Having an inflation hedge through property value appreciation
- Owning a tangible asset with intrinsic value
However, real estate investments also present certain risks. Property management can be time-consuming, and busy physicians may not have the time available to handle it on their own. In that case, you can hire a property manager, but this can be expensive, cutting into your profits.
Additionally, real estate markets can be illiquid, making it difficult to access capital quickly when you need it. Finally, geographic concentration in local markets can create concentration risk if regional economic conditions deteriorate.
There may be ways to overcome these challenges. Working with a knowledgeable and experienced managing partner will give you access to meaningful insights about how to make smart real estate investment decisions with your available time and money.
Private Equity
Private equity funds, including private equity real estate, invest in established companies that are not publicly traded. These funds work to improve operations and increase value before eventually selling their positions. These investments typically require significant time commitments of five to ten years.
For physicians, private equity can provide high returns without the volatility of public stock markets. A great benefit of private equity is that professional management teams handle all investment decisions and company oversight, making this a truly passive investment option for busy medical professionals.
Other advantages of private equity include:
- Professional management reduces your overall time commitment
- Good potential for higher returns than public markets
- Improved diversification across multiple companies and industries
The primary disadvantages of private equity involve illiquidity and high minimum investments. Once committed, capital may not be accessible for several years, which is why you must engage in careful cash flow planning. Additionally, the complex fee structures can reduce overall returns, and there’s no guarantee that private equity will outperform public markets in all economic cycles.
Hedge Funds
Hedge funds use sophisticated investment strategies that are designed to generate returns, regardless of what direction the market is headed. They do this through a number of means, but in particular, you’ll see leverage, derivatives, and short selling used.
For physicians seeking portfolio diversification, hedge funds can provide exposure to strategies other than traditional investments. Professional fund managers handle all trading decisions, and this allows physicians to access complex strategies without requiring specialized knowledge of the markets. It’s not that a surgeon or physician can’t develop this specialized knowledge; it’s that, often, there isn’t enough time to do so.
Benefits of hedge fund investment include:
- Professional strategy execution
- Potential returns in declining markets
- Access to sophisticated trading techniques
However, keep in mind that hedge funds typically charge high fees, which can significantly impact your returns. Also, their performance can be inconsistent, and the complexity of strategies may make it difficult for investors to understand exactly how their money is being managed. Finally, many hedge funds have extended lock-up periods that limit investor liquidity.
Other alternative investment options
Several additional alternative investment categories may be suitable for physician portfolios, each offering unique characteristics and potential benefits.
Commodities trading involves physical goods such as gold, oil, agricultural products, and industrial metals. These investments can serve as inflation hedges. Like other alternative investments, they are often chosen as part of a portfolio diversification strategy.
Venture capital funds invest in early-stage companies with high growth potential, typically in technology or innovative sectors. While carrying substantial risk, these investments offer the possibility of significant returns–if portfolio companies achieve success.
Other alternative investment options include:
- Private credit and direct lending opportunities
- Infrastructure investments in essential services
- Art and collectibles
- Cryptocurrency and digital assets
- Structured products combining multiple asset classes
Each of these investment types carries distinct risk profiles, liquidity characteristics, and return potential that should be carefully evaluated against individual financial goals and constraints.
Are alternative investments a good option for you?
Determining whether alternative investments are appropriate for your goals requires an honest assessment of your financial situation, risk tolerance, and investment timeline. A physician with a stable income stream, adequate emergency reserves, and long-term investment goals is likely to be a good candidate for alternative investments. However, fitting the right profile for alternative investments doesn’t mean it’s the best choice for you. It is important to work with knowledgeable, professional advisors and fund managers to make smart decisions with your investable income.
To make a decision you can stand behind, try these next steps:
- Evaluate your current portfolio for any gaps that alternative investments might fill
- Assess your risk tolerance, including both your financial capacity for risk and your emotional comfort with things like illiquidity
- Identify your long-term goals for investing, your medical practice, and retirement
- Consider what you would do during a period of poor performance
- Determine how much time you have available to actively monitor your alternative investments; do you want to be hands-on or take a more passive investment approach?
If you are looking for someone who can guide you through your options, choose someone who understands both alternative investments and the unique needs of medical professionals. That way, you can work with someone who can help you avoid mistakes while identifying the right opportunities.
Apta Investment Group helps physicians make informed decisions about their money
Apta Investment Group specializes in providing real estate investment opportunities specifically designed for busy medical professionals. Founded by Dr. Vasu Kakarlapudi, we understand those unique challenges and opportunities that physicians face in building long-term wealth.
With over 20 years of experience, Apta Investment Group has helped hundreds of physicians achieve greater financial independence through strategic real estate investments. The company’s co-investment model ensures that Apta’s management invests alongside their physician partners. This aligns interests and demonstrates our confidence in every opportunity.
By handling all property management and investment oversight, Apta enables busy medical professionals to benefit from real estate ownership without the time commitments typically required. To learn more about whether alternative investments may be the right strategy for you, contact Apta Investment Group today. We look forward to discussing real estate investment opportunities designed specifically for physicians seeking true financial independence.
Types of Alternative Investments: FAQ
What qualifies as an alternative investment?
An alternative investment is any investment vehicle outside of traditional stocks, bonds, and cash equivalents.
Who can invest in alternative investments?
Although almost anyone can invest in stocks and bonds, alternative investments have some additional requirements. These investment opportunities may be restricted to accredited investors. Physicians often qualify because of their income levels.