There are two great reasons for buying a vacation home: You want one and you can afford to buy it. Buying a vacation home as an investment, however, should not be your primary motivation.
Some vacation properties can also be good investments. Others aren't. As recent history has shown, real estate prices can go down as well as up, and there are no guarantees.
It's been a little while since we visited the topic of alternative investments. In the last piece, published in January, we tried to wrap our arms around what the term 'alternative' really means. Today we're going to look at how alternatives are actually used. While the focus is on the asset side of the equation (as opposed to the strategy side), this snapshot can give you an idea of how real world investors position alternatives in their portfolios.
One thing I wanted to point out is that there are some alternatives that can not or should not be used in certain parts of your portfolio. For example, collectibles are generally an outright no-no in your IRA. Also, while limited partnerships are allowed, they are fraught with peril in IRAs due to a tax term called Unrelated Business Taxable Income (UBTI), which could subject the IRA to current taxation.