Best Alternative Investment Opportunities in India

It goes without saying that when it comes to money, everyone looks for growth. While traditional low-risk options are part of almost everyone’s portfolio, there are always other options worth exploring. These investments go beyond the scope of traditional financial investments and can bring in better-than-expected yields.

So, what exactly are alternative investments? 

It can be said that alternative investments are non-traditional investments. They are unlike high-risk assets like mutual funds, cash, stocks, and bonds as the risk element in these investments is low, being not directly connected to the market.

Alternative investing was formerly popular exclusively with extremely wealthy individuals and institutional bodies. However, a growing number of people and retail investors are gradually shifting to alternative investments.

It is pertinent to note that like any other investment option, the rate of return on alternative investments is not guaranteed but when compared to more conventional investing options, alternative investments bear the potential to provide larger and more lucrative returns.

In most public assets, an investor is purchasing a paper asset or the discounted value of anticipated future earnings. This implies that they do not own the property but when they invest in alternative investment options, like commercial real estate, they immediately own the property.   

Now, which are the best investment options in India in 2022

There are quite a few attractive alternative investment options in India of varying ticket sizes, these include – 

Leasing

This is an easy contractual arrangement that requires the lessee (user) to make regular payments to the lessor (owner) in return for the use of an asset for the duration of the lease. Equipment, vehicles, and furniture are some of the most often leased items.

Investment in leases enables you to purchase an asset (such as furniture, electronics, or vehicles) and lease it to a business in exchange for defined monthly returns.

Companies can scale up more quickly by using leased assets, while investors can benefit from fixed, non-market-linked monthly returns with a low ticket size investment of ?20,000.

Also, it is important to note that amongst the many benefits of leasing, fractional ownership of the asset leased is of primary importance. This is because it allows investors to diversify their portfolio by investing through a small ticket size and avail the many advantages of such deals.

Let us understand this through an example-

A fleet company wishes to add 100 new cars to its fleet every month. Instead of buying these cars outright, they can work with Grip to lease these cars and commit to paying a fixed rental or lease amount every month.

Thus, any investor can invest in purchasing and leasing of these cars and get a proportionate share of returns. Investors earn a fixed monthly return (it also becomes a great source of passive income) through this mode of alternative investment which is non-volatile, i.e., not associated with market ups and downs.

Inventory Financing

Many companies invite investments through inventory financing which works for both investors and the company. Companies need to hold inventories of raw materials and finished goods to meet the demands of their customers and keep their production cycle going. This however blocks their capital. By inviting investors to fund their inventories, these companies can scale their business being asset light. 

Wrong. This is not what inventory financing is. Inventory financing is raising money for inventory by a company through crowdfunding. You as an individual investor would lend money to the company for buying inventory and earn interest in return.

For example: Neeman's, an eco-friendly footwear company invites investors to provide inventory finance for procuring raw materials for their business. Investors will finance through Grip. Neeman's uses these funds to speed up manufacturing and increase stock. Investors like you and me can earn proportionate returns from Neeman's. The maturity period for this deal is 3 months, and you can earn a pre-tax IRR of 11.6%. 

This is an opportunity to support a budding startup and earn healthy returns. Not only are you building a financial ecosystem helping startups through crowdfunding but as an individual investor you are earning great returns. 

Commercial Real Estate

Investment in commercial real estate has emerged to be one of the most popular modes of alternative investments in India. 

Real estate fractional ownership is a widely chosen alternative investment option as it follows the notion that enables a collection of like-minded individuals to purchase a commercial property as fractional owners or investors for a small sum of money.

To enable consumers to take part in newer prospects, the idea of investing in real estate merely divides the pricey acquisition cost into multiple fractions. A single investor or property owner will have less financial stress with fractional real estate ownership.

In the recent time, a massive shift in commercial real estate investment is observed, owing to its lucrative features like higher rental income as compared to residential properties, MNC tenants who invest for a longer lock-in period, more lease tenures and are backed by a strong credit.

Startup Equity 

One of the most lucrative alternative investment options in India is investing in startup equity and becoming a Venture Capitalist. By providing startup capital or small business finance in exchange for stock, you can become a venture capitalist. 

Investing in startup equity Venture Capital takes substantially more capital than P2P lending or even real estate. However, the company in which you have invested may pay you dividends and royalties. Future firm sales may also result in a hefty buyout for you.

Since the success of your investment is directly correlated with the success of the company you are investing in, investing in startup equity Venture Capital as an alternative investment carries significant risks.

Corporate Bonds

Companies can borrow money from investors by using financial instruments (or securities) called Corporate Bonds. The funds raised are used to accomplish company goals including initiating new initiatives, expanding existing firms, or meeting working capital requirements.

Bond buyers lend money to companies issuing the bonds. In exchange, the companies sign a legally binding agreement to pay interest on a regular basis and repay the principal balance when it matures.

Investors can expect a set rate of return on corporate bonds that is higher than that on fixed deposits and other fixed-income securities.

To conclude…

When you want your investments to maintain a steady flow of growth, then diversifying investment options makes greater sense as even if one investment fails to perform as expected, the others maintain the return balance. If you are guided by an alternative investment platform performing due diligence on the companies they host, then investment becomes safer. Try out alternative investments and let your wealth grow with Grip. 

Want to stay at the top of your finances? 

Join the community of 2.5 lakh+ investors and learn more about Grip Invest, the latest financial knick-knacks and shenanigans that take place in the world of investing.

Happy Investing!

Disclaimer - Investments in debt securities are subject to risks. Read all the offer-related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading. This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip Invest”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip Invest or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip Invest does not guarantee or assure any return on investments and accepts no liability for the consequences of any actions taken based on the information provided. For more details, please visit https://www.gripinvest.in/. 
Registered Address - 106, II F, New Asiatic Building, H Block, Connaught Place, New Delhi 110001.