For many investors, stocks and bonds form the foundation of a portfolio. But they are not the only options. Alternative investments are assets outside traditional stocks, bonds and cash. They can include real estate, gold, private companies, cryptocurrencies, commodities and collectibles.

The appeal is straightforward: alternative assets may diversify a portfolio by providing exposure to investments that do not always move in the same way as stock markets. Diversification can help reduce overall portfolio risk, although it cannot eliminate the possibility of losses.