Whether you like it or not, money is a central part of all of our existence. Not the paper stuff itself though, it’s all of the things that we can attain or obtain if we have access to it. It’s the basis for a financial system that we’d be back in the stone age without, and from what I know about the stone age, it doesn’t sound too pleasant. Our minds have developed and become progressively more creative over the course of time and the virtual invention of financial systems are perfect proof of the immense amount of progress we’ve made as human beings. Most of us now, just like most who came before us, are and were just along for the ride. But, a lot of us have developed a solid understanding of the ingenious ideas that certain individuals have brought into existence and that many people since have improved or built upon.
Progress is the name of the game and if it weren’t for the advancements of those who came before us, then every generation would be starting at square one and we’d never get anywhere. The financial system has evolved ever since the first form of currency was ever used thousands of years ago. Now, it’s grown to be so complex that only the best of the best at the best CPA firm in the country, combined with the best of the best economic minds of the country, could possibly make sense of it all. That’s why there are so many specialists in the financial sector, and why there are even more coming into existence every time another investment strategy gains some footing and becomes the new finance zeitgeist.
The most recent popularized way to generate capital in this crazy world of ours, are hedge funds. You may have heard some things about them in the news in the last few years, but they’ve become very good investment vehicles for huge money market players who are looking for as close to guaranteed returns as possible in diverse, rising and falling markets all over the world. They typically deal in liquid assets and compared to other kinds of funds, they usually produce relatively quick returns. When you’re dealing with tens of millions, sometimes hundreds of millions of dollars in a single investment, even a percentage point or two yielded on a return can be literally millions of dollars. It seems that people don’t care too much about small percentage points until those percentage points equal millions of dollars, then all of a sudden every single number before and after the decimal point matters a great deal.
Why a lot of accredited investors like hedge fund investments is because the manager of the fund that they’re investing their money in, in an effort to pool as much capital as possible for massive investment power, also puts their own money in. This assures the investors that the fund manager and their interests are directly aligned and there isn’t a conflict of interest. Regulators don’t cap investments with hedge funds like they do with mutual funds, and hedge funds aren’t ever offered to the general public to participate in or purchase. It’s kind of like a high-roller club only for the crème de le crème of the investor world. They typically do a great job of consistently making positive returns, even if those returns aren’t complete windfalls by any means. But, once you’ve got millions to play with, gaining a few more million here and there is a pretty effective way to continue fortifying your capital fortress.
Most investors who are privileged enough to participate in these money-making ventures are able to do so without a ton of commitment. Besides their initial capital investment, they’re typically able to jump in or withdraw at the end of any given month or sometimes, quarter. As I said earlier, this is a growing investment strategy and as of a recent estimate taken in 2009, 1.1% of the total assets and funds being held by all financial institutions in the world are held via hedge funds. A more recent estimate taken in 2013 for the entire hedge fund industry on a global scale, was 2.4 trillion dollars! That’s a lot of cheddar, right? As time goes on, if hedge funds continue to consistently produce positive returns for those investing in them, there is no doubt that more people will get into the hedge fund game. With big money, big rewards can be had and those who are already wealthy, can become even more so when investing with a good hedge fund who’s manager knows what they are doing.