Today’s financial landscape is rapidly evolving. Traditional investment avenues do not always offer the optimal route to wealth growth. This is where alternative investments come into play. These unconventional opportunities are gaining traction in India. Thus, offering investors the chance to diversify their portfolios and potentially achieve remarkable returns. In this comprehensive guide, we’ll delve into the world of alternative investments in India.
Commercial real estate stands out as a prime alternative investment in India, It solidified its position among the best investment options in India. This gets attributed to its unique potential to offer consistent rental income alongside appreciation in property value. Diverse methods, such as crowdfunding and fractional ownership, have broadened the avenues for engaging in commercial real estate. Yet, a particularly intriguing avenue is structured debt. It is a method that has garnered considerable attention as one of the best exceptionally enticing investment opportunities in India. With an approachable initial investment of Rs. 10 lakhs, this route presents the potential to attain an impressive internal rate of return (IRR) of 17%.
Understanding Alternative Investments
Alternative investments represent a departure from conventional investment methods. They encompass a wide range of options beyond stocks and bonds, including real estate, precious metals, peer-to-peer lending, startups, cryptocurrencies, art, and more. Each alternative investment avenue carries its own set of returns and risks, offering investors a chance to diversify their holdings and tap into potential wealth growth.
10 Best Alternative Investments in India
- Real Estate Investments
When it comes to alternative investments, real estate has long been a favored choice. However, it’s not just about owning a property outright. The world of real estate has expanded to include innovative strategies like fractional ownership and crowdfunding. These methods enable investors to dip their toes into the lucrative real estate market without shouldering the entire financial burden. Moreover, commercial real estate, known for its dual income streams of rental earnings and property value appreciation, has been capturing attention.
Returns: Commercial real estate in India has been known to offer attractive returns, with rental yields varying between 6% to 10% and potential capital appreciation over time.
- Precious Metals
Gold and silver have stood the test of time as hedges against economic uncertainties. Investing in precious metals provides a tangible asset that can withstand market volatility and currency fluctuations. Whether through physical ownership, exchange-traded funds (ETFs), or sovereign gold bonds, Indian investors have a range of options.
Returns: Historically, gold has shown an average annual return of around 10% over the past few decades, making it an appealing option for wealth preservation and growth.
- Peer-to-Peer Lending
The digital age has given rise to peer-to-peer (P2P) lending platforms, creating a new channel for both investors seeking returns and borrowers seeking loans. These platforms match lenders directly with borrowers, eliminating intermediaries and potentially offering higher interest rates for investors than traditional savings accounts.
Returns: Depending on the platform and risk level, P2P lending returns can range from 8% to 18% annually, providing an avenue for relatively passive income generation.
- Startups and Angel Investing
For those with an appetite for risk and a passion for innovation, investing in startups and becoming an angel investor can be highly rewarding. India’s booming startup ecosystem presents opportunities to support early-stage companies and potentially benefit from their growth trajectory.
Returns: While the risk is higher, successful angel investments can lead to substantial returns, with some startups delivering returns of over 100% within a few years.
- Cryptocurrencies
The world of cryptocurrencies has taken the financial world by storm. While highly speculative and volatile, cryptocurrencies like Bitcoin and Ethereum have captured the imagination of investors seeking extraordinary returns.
Returns: Cryptocurrency returns can be extremely high, with some early investors experiencing gains of thousands of percent. However, the risk is equally high, and caution is advised.
- Art and Collectibles
Investing in art, collectibles, and rare artifacts is an intriguing alternative investment. Beyond aesthetic appeal, these items can appreciate in value over time. Art auctions, vintage collectibles, and limited-edition items have gained popularity among investors seeking uniqueness in their portfolios.
Returns: Returns on art and collectibles can vary significantly, with some pieces appreciating modestly while others experience exponential growth.
- Real Estate Crowdfunding
Real estate crowdfunding has democratized the real estate investment landscape. Investors can pool funds with others to collectively invest in larger projects that were once accessible only to institutional investors. This approach offers diversification and lowers the entry barrier.
Returns: Real estate crowdfunding platforms typically target returns in the range of 12% to 20%, depending on the project and risk factors.
- Real Estate Structured Debt
Structured debt, offered by platforms like Assetmonk, presents an alternative investment avenue. This strategy involves investing in real estate-backed debt instruments, which provide fixed-interest payments and the potential for capital appreciation.
Returns: Structured debt investments often aim for impressive returns, with projected Internal Rate of Return (IRR) figures of around 17%, making them a compelling option for passive income seekers.
- Alternative Investment Funds (AIFs)
Alternative Investment Funds (AIFs) are gaining traction as a significant avenue for alternative investments in India. AIFs serve as professionally managed investment pools that channel funds into various alternative assets beyond the traditional stock and bond markets. These funds provide investors with the opportunity to diversify their portfolios and potentially access higher returns by tapping into less conventional investment options.
Returns: The typical range of returns for alternative investment funds in India falls between 11% and 13%.
- Invoice Discounting
Invoice discounting is one of the alternative investments in India. It entails a company selling its outstanding invoices or accounts receivable to a third-party investor at a reduced price. This enables the company to obtain instant cash inflow rather than awaiting customer payments. From the investor’s standpoint, it presents a chance to gain profits by procuring these invoices at a lower rate and subsequently collecting the complete payment from customers upon maturity.
Returns: Invoice discounting offers an annual pre-tax average return of as high as 15%.
Bottom Line
In a dynamic financial landscape, thinking beyond conventional investment routes is crucial for achieving wealth growth. Alternative investments in India provide avenues to diversify portfolios, mitigate risks, and explore new opportunities. From real estate to precious metals, peer-to-peer lending to startups, and even emerging trends like cryptocurrencies, each alternative investment option carries its own set of benefits and risks.
Positioned as one of the best investment opportunities in India’s real estate landscape, structured debt offers an appealing choice. It presents a source of passive income through steady fixed-interest payments and substantial returns. If you’re keen to embark on your investment journey but uncertain about where to start, Assetmonk is your guiding light. Within India’s alternative investment platforms sector, Assetmonk stands out as a significant player, renowned for its distinct excellence. Our primary expertise lies in providing tailored guidance and carefully handpicked fixed-income investment options backed by real estate assets. Our unwavering dedication is aimed at achieving an impressive Internal Rate of Return (IRR) of 17%.
FAQs
Q1. What are alternative investment funds in India?
A. Alternative Investment Funds (AIFs) in India are professionally managed investment vehicles that pool funds from investors and invest in a diverse range of assets beyond traditional options like stocks and bonds. They include categories such as real estate, private equity, venture capital, commodities, and more, offering investors an opportunity to diversify their portfolios and potentially achieve higher returns.
Q2. How to invest in alternative investment funds in India?
A. To invest in alternative investment funds (AIFs) in India, you typically need to follow these steps:
- Research: Understand the categories of AIFs and their risk-return profiles.
- Choose a Fund: Select an AIF that aligns with your investment goals and risk tolerance.
- KYC: Complete the necessary Know Your Customer (KYC) procedures with the AIF’s manager.
- Investment Amount: Determine the minimum investment requirement for the chosen AIF.
- Documentation: Complete the required paperwork and agreements.
- Investment: Transfer the investment amount to the designated account.
- Monitor: Stay informed about the performance and updates of the AIF.
Q3. What are alternative investments in India?
A. Alternative investments in India encompass a range of unconventional options beyond traditional stocks and bonds. These include real estate, precious metals, peer-to-peer lending, startups, cryptocurrencies, art, collectibles, and more. Alternative investments provide investors with diverse opportunities to potentially achieve higher returns and mitigate risk through non-traditional avenues.
Q4. Which is the best alternative investment platform in India?
A. The best alternative investment platform in India can vary based on individual preferences, investment goals, and risk tolerance. Some prominent names in this sector include Assetmonk, Groww, Upstox, KredX, and more.