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Groceries are one of the biggest budget items on most families’ lists. Of course, how much you spend will depend on where you live, what you eat, and what your spending habits are. As food costs increase, so may the grocery budget for a family of three.

As you create or revise a monthly budget, it can help to look at how your food spending compares to other families.

American Average Grocery Budget for Family of 3

Each month, the USDA publishes a report showing the average costs of groceries at three price levels: budget, moderate, and liberal. Here’s a look at the middle-of-the-road spending for a family of three in 2023. Notice how the average cost of groceries rose more than $87 over the course of the year.

💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

How Much to Budget for Groceries Per Person

No matter the size of your family, your grocery budget can depend largely on the cost of food where you live. For instance, according to data from the Missouri Economic Research and Information Center, people in Hawaii, Alaska, and New York tend to pay more for food than residents of Texas, Wyoming, and Michigan. This means $700 per month for groceries may be more reasonable in Texas than in, say, Hawaii.

Creating a household budget and aren’t sure how much to allocate for food? A good rule of thumb is to set aside 10% of your income for groceries and other food costs. So if you take home around $5,000 a month, plan on budgeting $500 for food.

However, you may need to adjust that percentage, especially if you have a larger family or live in an area with a higher cost of living. It may be wise to track how much you spend in any given month on food and see what a reasonable budget would look like for you and your family.

How to Prioritize Your Grocery Spending

What does it mean to prioritize your grocery spending? It’s simply a way to ensure you’re making the most every dollar when you’re grocery shopping on a budget.

One strategy to consider is to set aside money each month automatically so you have enough to spend on food. Another option is to put groceries as one of the top line items in your monthly budget so you don’t forget to set aside money for it first.

It’s also important to scrutinize how much you spend on food and the choices you make in the grocery store aisles. It could be that your grocery budget is fine, but you may need to reel in how much you spend on certain ingredients or find cheaper alternatives.

Above all, though, make sure you settle on a budget that works for you and your family. Be sure it’s enough to cover what’s important to you all while still sticking to your larger spending plan.

How to Stay Within Your Grocery Budget

It’s easy to give in to temptation at the grocery store, but rest assured, staying within budget is possible. These tips can help:

Shop at discount retailers

Buying your groceries at lower-priced retailers can add up to significant savings, even better if you’re able to purchase ingredients you need on sale. Some retailers may have rewards programs, helping you earn free or heavily discounted groceries.

•   Make pricey purchases go the distance: Meat or related products like eggs tend to cost more than other ingredients. Look into recipes that help you stretch a pack of meat or carton of eggs over several meals.

•   Use what you have: Before heading to the grocery store, go through your refrigerator, freezer, and pantry to see what you already have. Besides preventing food waste, this also helps you avoid purchasing items you don’t need.

•   Buy store brands: In many cases, store-brand items cost much less than brand-name items. The quality for generic items may also be similar.

•   Use coupons: Though it may not seem like it’ll make a huge difference, using coupons or grocery store rebates can help make every cent count. Be sure to do some comparison shopping before you hit the checkout counter. Even with discounts, you may still come out ahead with generic or store-brand versions.

•   Embrace meal planning: Making plans can help you estimate your food costs for the week and ensure you only purchase items you need.

•   Do a spending audit regularly: Tally up how much you’ve spent and what you’ve spent it on. Look for places to cut back on spending, such as purchasing pricey ingredients that can only be used once.

Recommended: Does Buying in Bulk Save Money?

How to Budget for Restaurants and Dining Out

Eating out is a luxury, but it can also be done on a budget. Consider the following tips the next time you’re considering a night out on the town:

•   Decide how many times a month you want to eat out: Knowing approximately where and how many times you go out in a given month will help you make a realistic budget.

•   Consider drinking only water: While it’s tempting to order fancy drinks when you’re out, sticking with water can help you and your family save money.

•   Look for weekly specials or discounts: In an attempt to earn your business, many restaurants will offer specials, such as free kids meals or discounted menu items. These deals usually happen on a weekday, though on occasion you may find discounts during restaurants’ busier times as well.

•   Budget for tipping: Paying for your meal isn’t the only cost involved in dining out. Make sure to leave enough room so you can tip your server or bartender.

Recommended: Examining the Price of Eating at Home vs Eating Out

Tips for Getting Help if You Can’t Afford to Buy Groceries

Sometimes, budgeting will only get you so far. If you need help with food and other necessities, there are some organizations and agencies you may be able to turn to for temporary help:

•   Supplemental Nutrition Assistance Program (SNAP): If you can meet the program’s eligibility requirements, the government-run program will give you a monthly stipend to spend on food for you and your family.

•   Special Supplemental Nutrition Program for Women, Infants, and Children (WIC): The WIC program is for eligible pregnant women or mothers who have infants up to age 5 who are at risk of not receiving enough nutrients. Note that you’ll need to apply for this government-funded program.

•   USDA National Hunger Hotline: If you’re facing food insecurity, you can call the hotline daily from 7am to 10pm ET to find resources like local meal sites or food banks.

•   Local food pantries: Many religious organizations, colleges, and other local nonprofits may have food pantries. Call ahead to see when you can receive assistance.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

Budgeting for grocery costs isn’t always easy, but it’s worth the effort. It may be worth considering looking at average costs in your area as a guideline for how much to budget and looking at ways to save on food to ensure you’re not spending more than you can afford to. You may also want to consider using online tools like a money tracker app so you can maximize every dollar you make.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is a reasonable grocery budget?

Most experts recommend budgeting around 10% of your income to food costs.

How much should a family of four spend on groceries?

Depending on where you live, the average cost of groceries for a family of four can average from $1,044.70 to $1,568.10, according to data from USDA.

How much does an average family spend on groceries?

The average family spends about 11.3% on groceries, according to USDA data.

Photo credit: iStock/Prostock-Studio

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Whether you’re deciding on a new career path or wondering if you’re being paid enough, it can help to know what the typical American worker earns per year.

Based on the latest data available from the Social Security Administration (SSA), the average annual pay in the U.S. in 2022 was $63,795 — a 5.32% jump from the previous year. The U.S. Bureau of Labor Statistics (BLS) estimates the average worker made closer to $69,986 that same year. The amount you make may depend on a number of factors, including your occupation, where you live, your gender, and your level of education.

Key Findings

Let’s take a closer look at how the average annual pay in the U.S. has changed over a three-year period based on data from both the SSA and BLS.

It can also be helpful to look at median earnings, which represent the midpoint of salaries in the U.S. In other words, half of the salaries fall below the median, and half are higher than the median.

The following table shows the median annual salary for a three-year period.

As you can see, average and median incomes have risen each year. However, average salaries can be affected by various factors such as your occupation, age, and gender. Note that the numbers above also don’t include unearned income.


💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

Examples of High-Salary Jobs in the US

Some industries tend to pay more than others, which means the career you choose may affect how much you earn. Here’s a sampling of high-paying jobs and their average annual salary, according to the BLS:

•   Cardiologist, $421,330

•   Dentist, $172,290

•   Aircraft pilots and flight engineer, $225,740

•   Lawyer and judicial law clerk, $161,680

•   Public relations manager, $150,030

•   Air traffic controller, $130,840

Recommended: How to Reduce Taxable Income for High Earners

Average American Income by Occupation

While salaries tend to vary based on geography, seeing how much certain types of jobs pay can be informative. Let’s take a look at different occupations and how much they typically pay.

Keep in mind that average salaries may differ depending on the specific occupation you have. For example, although claims adjusters fall under the business and financial operations category, their average salary is around $72,040.

US Income by Gender

Demographics, specifically gender, are another factor to consider. By and large, men tend to outearn women throughout their career. The median annual salary for a 16- to 24-year-old man is $38,688; a woman of the same age earns $36,088, per the latest data available from the BLS. Likewise, the median annual salary for a man aged 25 and older is $64,376; a woman of the same age earns $52,520.

Median Income by State

Wages often vary based on where you live. In many cases, states with higher costs of living also have higher wages. For example, the median annual income in Hawaii is $104,704 — much higher than Mississippi’s median annual income of $70,950.

Below is the median income by state for a household of three people, according to data compiled by the Census Bureau between April 1 and May 14, 2023.

US Income by Race

As the BLS data below shows, there is often a pay disparity among workers of different races and ethnicities.

•   Asian, $79,456 per year

•   White, $60,164

•   Black or African American, $50,284

•   Hispanic or Latino, $45,968

How Does Your Income Stack Up?

Now that you’ve seen some of the average and median annual salaries by occupation, location, gender, and race or ethnicity, how does yours compare? If you’re not making as much as you’d like, you may want to research wages in your industry and region, and use that information to help you negotiate a higher salary. If you’re ready to make a bigger change, you can use this data as you consider whether to switch to a more lucrative field or relocate to a higher-paying region.

Recommended: Cost of Living by State

How to Stretch Your Income

Here are some different strategies to help you make the most of the money you make:

Track Your Spending

Understanding exactly where your money is going can help you keep tabs on where your money is going and identify areas where you can cut back. Consider using a spending app to track your spending and saving.

Negotiate Bills

Want to lower monthly expenses, such as your cell phone or internet services? Consider calling up various providers to see if you’re able to get a better deal or if there are promotions you can take advantage of.

Cut Back on Large Expenses

Housing, food, and transportation tend to be the largest line budget items. Explore ways to trim your biggest costs. Examples include refinancing your mortgage, negotiating your rent, shopping at discount grocery stores, and taking public transportation when possible.

Sharpen Your Marketable Skills

Accepting networking opportunities and taking professional development courses could help you become more marketable as an employee. This in turn could set you up to earn more in the long run. If you’re on a tight budget, look into no- or low-cost ways to cultivate high-income skills, and ask your employer if there are any free resources available.

Pros and Cons of a High Salary

A high income can be great, but it does come with some downsides.

Pros:

•   Improved quality of life: With more money, you can afford a higher standard of living and be able to afford different amenities such as better access to healthcare and food.

•   Financial security: The more you earn, the more you can feel secure you have enough money to afford the things you want and need.

•   Ability to achieve financial goals faster: Having more disposable income could mean you can set more money aside for long- and short-term savings goals, like retirement or going on a family vacation.

Cons:

•   Higher taxes: Earning more can put you in a higher tax bracket. However, there are ways to reduce your taxable income.

•   Pressure to maintain income: If you’re accustomed to a certain living standard, you may feel like you need to keep earning the same amount or more to maintain it.

•   More work stress: In many cases, higher-paying jobs come with more responsibilities and, at times, longer hours.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

Understanding what the average American worker makes in a year can come in handy, especially if you’re considering a new career path, negotiating a higher salary, or looking for a new place to live. According to the latest data from the Social Security Administration, the average annual pay in the U.S. is $63,795. But the amount you earn may depend on a wide range of factors, such as the industry you work in, where you live, your gender, and your race or ethnicity.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is a good salary in the US?

There’s no one set amount that would be considered a good salary in the U.S. However, the average salary is around $63,795, according to the Social Security Administration.

What is the real average wage in the US?

The average wage in the U.S. is $69,986 according to the most recent data available from the U.S. Bureau of Labor Statistics.

What is the top 10 percent income in the US?

According to the Economic Policy Institute, the top 10% of workers in the U.S. earn $135,605.

How much should you be making at 30?

While there is no definitive amount you should earn by the time you’re 30, the average salary for U.S. workers aged 25 to 34 is $56,160, according to data from the U.S. Bureau of Labor Statistics.

Photo credit: iStock/VAKSMANV

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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While most investors are familiar with stocks, bonds, and cash, there is a world of investment opportunities beyond these assets.

Alternative investments are those outside of traditional assets. While they can be higher risk, alternatives can offer various potential upsides for investors, such as portfolio diversification, higher returns compared to stock and bonds, and the opportunity to earn passive income.

What Are Alternative Investments?

Alternative investments — commonly known as alts — are those that are different from conventional stock, bond, and cash categories. Alts include a wide variety of securities as well as tangible assets such as commodities, foreign currencies, real estate, art and collectibles, venture capital, derivative contracts, and more.

Alts typically have a lower correlation with traditional asset classes, meaning they tend to move independently of them, and thus they may provide investors with portfolio diversification. They also have the potential to generate higher returns when compared to stocks and bonds, and some are structured to provide passive income to investors. But alts typically include higher-risk assets and strategies, which can be illiquid and harder to track, owing to a lack of transparency.

Alts used to be accessible mainly to high net-worth and accredited investors, but now they’re available to a range of investors, thanks to the emergence of vehicles such as mutual funds and ETFs that include various alternative assets and strategies.

The lack of liquidity for most alts means that determining the fair market value of these assets can be quite challenging. Often there is little by way of public data available regarding price changes or asset appreciation or depreciation, making it difficult to assess historical performance.

💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.

Types of Alternative Investments

The following list encompasses some common types of alternative investments and alternative strategies available to investors today.

1. Real Estate

•   Summary: You can invest in real estate by owning rental property, investing in commercial real estate, industrial real estate, healthcare facilities, and more. Investors can also buy into Real Estate Investment Trusts, or REITs.

•   Pros and cons: Although real estate tends to hold its value over time, there are no guarantees. Different properties can be vulnerable to a host of factors including business trends, land values, interest rate risk, and more.

Recommended: How to Invest in Real Estate: 7 Ways for Beginners

2. Commodities

•   Summary: Commodities are raw materials that include agricultural products (e.g. grain, meat), precious metals such as gold, silver, copper, energy (including renewables), and more. Generally, investors participate in commodity trading using futures contracts, index funds, mutual funds, or ETFs.

•   Pros and cons: Some investors consider commodities a good hedge against inflation and they have the potential to deliver a profit. However, commodities can suffer from any number of unexpected risk factors, from weather conditions to supply chain breakdowns and more.

Recommended: How to Invest in Commodities

3. Private Equity

•   Summary: Private equity (PE) firms invest capital in companies that aren’t publicly traded, often with the aim of taking over the company. Because PE is a high-stakes endeavor, these opportunities are generally available to high net-worth and accredited investors. Now, however, retail investors can gain exposure through vehicles such as interval funds.

•   Pros and cons: Private equity is considered a high-risk investment, but if a private company goes public or gets acquired, these investments may perform well. The risk with private equity investments is that these are often focused on distressed companies, with a complex track record, and sometimes startups (see Venture Capital below).

Recommended: How to Invest in Private Equity

4. Venture Capital

•   Summary: VC investing is a way of putting money into startups with the hope of later gains, though there is no guarantee of a return. Investors can buy a slice of startup companies through equity crowdfunding platforms (which differ from traditional crowdfunding in that investors own equity in the company) and interval funds.

•   Pros and cons: Venture capital investing is considered a subset of Private Equity, as noted above. It can be risky because if the startup fails, investors may lose all of their money. On the other hand, if a startup does well, investors may see a significant profit.

Learn more: What Is Venture Capital and How Does It Work?

5. Private Credit

•   Summary: Private credit involves direct loans made to companies from non-bank entities. Private credit can be a more expensive way to borrow, but it can be faster for the companies needing capital, and for investors it offers the potential for steady interest payments.

•   Pros and cons: Private credit funds tend to see greater inflows when the stock market is underperforming, and they usually pay higher rates than conventional fixed income instruments. The risk here is that most PC funds offer only quarterly redemptions — so they’re quite illiquid — and they can be vulnerable to defaults.

Learn more: Private Credit: Types and Investing Benefits

6. Art & Collectibles

•   Summary: Works or art and other types of collectibles (e.g., wine, jewelry, antiques, cars, rare books) can personally appeal to investors, and may grow in value over time. It’s also possible to invest in fractional shares of art, or in shares of an art-focused fund.

•   Pros and cons: Investing in art or collectibles may provide a hedge against inflation or other market factors. That said, the price of upkeep, insurance, and maintenance can be considerable. And while some pieces may gain value over time, art and collectibles can also be subject to changing trends and tastes. Fraud is another risk to consider.

7. Hedge Funds

•   Summary: Hedge funds offer investors access to alternative strategies, like arbitrage, leveraged trades, short-selling, and more. Hedge funds aren’t as heavily regulated as other types of funds, so they’re able to make riskier investments and lean into aggressive strategies, with the goal of delivering outsized returns.

•   Pros and cons: While hedge funds sometimes deliver a significant profit, they charge high fees and investment minimums that often put them beyond the reach of mainstreet investors. Today, retail investors may be able to access mutual funds, ETFs, funds of funds, or other vehicles that employ similar alternative strategies.

8. Farmland/Timberland

•   Summary: Like many types of real estate, farmland and timberland tend to hold their value over time, as long as they remain productive. This type of property can be similar to commodities in that there is potential profit in the products that come from the land (e.g. produce and timber).

•   Pros and cons: Owners of farmland can lease out the land to earn income, which can be profitable for investors. The potential downside of investing in farmland and timberland are the environmental and weather-related risks that can impact both the value of the land and its productivity.

9. Infrastructure

•   Summary: Infrastructure refers to the physical structures that economies depend on: roads and highways, bridges and tunnels, energy pipelines, and more. Municipal bonds are one way to invest in infrastructure, as are some types of REITs (real estate investment trusts).

•   Pros and cons: As a non-cyclical type of asset, infrastructure investments may offer the benefit of less exposure to market risk factors, steady cash flows, and low variable costs. The risks of infrastructure investments include political and environmental factors that can impact or delay the execution of a project.

10. Foreign Currencies

•   Summary: Foreign currencies are an example of an alternative investment that can be highly liquid, and thus easier to trade.

•   Pros and cons: Currency trading is known for its volatility, and currency traders often make leveraged trades, assuming a high degree of risk. Retail investors may find it potentially less risky to invest via mutual funds, ETFs, foreign bond funds, and even certain types of CDs (certificates of deposit), although the underlying volatility of most currencies will influence the performance of these investments as well.

💡 Quick Tip: Newbie investors may be tempted to buy into the market based on recent news headlines or other types of hype. That’s rarely a good idea. Making good choices shouldn’t stem from strong emotions, but a solid investment strategy.

Advantages and Disadvantages of Alternative Investments

In sum, alternative investments are certainly worth considering given their potential advantages, but it’s important to keep in mind the possible disadvantages to make the best choices in light of your own goals and risk tolerance.

Advantages

•   May offer the potential for higher risk-adjusted returns.

•   Are typically not correlated with traditional stock and bond markets, so they may help diversify a portfolio and mitigate risk.

•   May have the potential to deliver passive income.

•   Some alts may hedge against inflation or interest rate fluctuations.

•   May appeal to an individual’s personal interests: e.g., art, wine, memorabilia.

Disadvantages

•   Are often higher risk, or can be subject to greater volatility.

•   Can be less liquid than traditional investments due to limited availability of buyers and lack of a convenient market.

•   Often limited to high net-worth and accredited investors.

•   May have higher minimum investment requirements and higher upfront fees.

•   May have less available public data and transparency about performance, making it difficult to determine an asset’s value.

Recommended: Why Invest in Alternative Investments?

How to Invest in Alternative Investments

As mentioned above, alternative investments used to be limited to accredited and high net-worth investors, but they’re now available to average investors through mutual funds, ETFs, and sometimes even through companies’ IRAs.

If you’re thinking about adding alternative investments to your portfolio, finding the right brokerage and/or asset manager can help you incorporate alts into your portfolio in the way that makes sense for your long-term plan. SoFi, for example, is working with knowledgeable asset managers in the alts space to provide access to mutual funds across a variety of categories.

Once you’ve identified the types of alternative assets that would suit your goals, your risk tolerance, and your plan (e.g., you might prefer commodities to owning art), you can look for the funds that would help you buy into these asset classes.

Here are some of the more traditional methods to invest in alternative assets:

Things to Consider When Investing in Alts

Alternative investments are complex, and while the risk may be worth the potential reward for some investors, there are some additional caveats to bear in mind about these assets.

How Are Alternative Investments Taxed?

Unlike conventional asset classes, which are typically subject to capital gains tax or ordinary income tax, different alts can receive very different tax treatments, even when investing in these assets via a mutual fund or ETF. When investing in alts, it’s wise to involve a professional to help address the tax-planning side of the equation.

What Role Should Alts Play in Your Portfolio?

Remember, because alts don’t generally move in sync with traditional asset classes, they may offset certain risk factors. And while alts come with risks of their own, including volatility and lack of transparency, within the context of your portfolio as a whole, alts, and funds that invest in alts, may enhance returns. Some alternative assets can provide passive income as well as gains.

It’s important to know, however, that alternative investments are higher risk, tend to be more illiquid, and less transparent. As such, alts should typically only be one part of your portfolio to complement other assets. Some advisors, for example, recommend up to a 10% allocation for alternative investments, though this number can vary.

The Takeaway

Alternative investments have the potential for high returns and may offer portfolio diversification. The scope and variety of these investments means investors can look for one (or more) that suits their investing style and financial goals. Unlike more conventional investments, alts tend to be higher risk, more expensive, and subject to complex tax treatment.

It’s important to research and do due diligence on any alternative investment option in order to make the best purchasing decisions and reduce risk. While some alternative investments are less accessible, others can be purchased through vehicles such as mutual funds and ETFs.

Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.

FAQ

Are ETFs considered alternative investments?

Generally no. For the most part, exchange-traded funds (ETFs) are passive investments — meaning they track an index — and typically that index is for a conventional asset class like stocks or bonds. That said, some ETFs track niche parts of the market, including certain types of alternative strategies, including options, long-short strategies, managed futures, real estate investment trusts (REITs), and more.

Are alternative investments worth it?

For some investors, choosing to add alts to their portfolio might be worth it because alternative assets can add diversification (which can help manage risk), and alts may enhance returns over time. But alts also come with their own set of risk factors, including the fact that some alternative assets are illiquid, and are not regulated like other financial products.

How do alternative investment funds work?

Alternative investment funds work in a range of ways. A mutual fund focused on alternative strategies, like derivatives, is likely to be actively managed and employ techniques like leverage or short selling. Before investing in an alternative fund, it’s wise to make sure you understand the underlying strategy, assets, and fees.

What are the key characteristics of alternative investments?

Alternative investments may offer portfolio diversification with low correlation to traditional assets, potentially higher returns, and may provide protection against inflation or interest rate fluctuations. However, they can be illiquid, may have redemption restrictions, and determining their real-world value can be challenging due to limited transparency and public data.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.
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