It is a matter of common sense that both active and passive investing are two proven ways to grow your money rather than keeping it idle in a savings bank account. If you are a High Net worth Individual (HNI) still confused about how to invest your wealth, let’s take a look at the 8 investment options that can generate higher returns.

 

Fixed-Income Funds

 

Fixed-income funds also known as debt funds or credit funds are the most popular and time-tested investment options. These asset classes, the darlings of the middle-class population, can also play a greater role in the diversification of large sized portfolios. These classic investment avenues consist of Fixed Deposits (FD), Triple-A (AAA) Bonds, and Government Bonds that can generate steady cash flow with higher security for your capital. The investors with a conservative risk profile can safely bet their money on fixed-income funds.

 

Direct Equity

 

After fixed-income funds, direct equity or stock market investments are the most popular investment avenues with higher returns but with higher risk. If you can invest a little bit of your time to study the fundamentals of the securities and analyse stock market trends, you can easily pick out lower risk, higher return yielding securities.

 

If you are an HNI with little time or interest to contribute towards investment research, you could always choose an expert Portfolio Manager. He can help you to pick stocks with meticulous risk assessment, and the expertise on fundamental and technical analysis.

 

Financial markets are evolving rapidly during this digital era. Powerful Artificial Intelligence (AI) technology and algorithms predict financial market trends giving lesser room for human emotions while trading. In this scenario, if your technical expertise permits, you can deploy your own algorithms. Otherwise, it is highly advisable to get an expert quantitative trader on board to make financial market investment decisions for you.

 

Real Estate Investment Trusts (REIT)

 

Real estate is another classic investment avenue that offers safety of your investment and yields higher returns. The dawn of the digital age has transformed this time-tested investment avenue for the better.

 

Emulating the model of mutual funds, a Real Estate Investment Trust (REIT) company pools the capital from various investors and invests it into income-generating real estate properties. Without bearing the pain of buying, managing, or financing any real estate properties by himself, an individual investor can earn dividends from real estate investments through REIT.

 

As REIT companies offer real estate investments as digitized stocks that earn dividends, they offer greater liquidity – if you sell your stock, the money is credited to your bank account the very next day. It is a greater development from the traditional real estate investments that require capital intensive yet time consuming real estate deals.

 

Currently, Mindspace Business Parks REIT, Embassy Office Parks REIT, and Brookfield India Real Estate Trust are the only three REITs available in India. In coming days, other leading names in the Real Estate Sector such as Godrej and DLF are also expected to enter the REIT arena.

 

Gold

 

Gold is another traditional investment avenue that has been greatly transformed by digitalization. Today, an investor can easily invest in digital gold or gold backed funds without worrying about the safety of holding actual gold in hand. This digital gold backed investments acts as a hedge against inflation and unpredictable financial market shocks.

 

Alternative Investment Fund (AIF)

 

Alternative Investment Fund (AIF) is an unconventional investment avenue. It is a privately pooled fund from both Indian and foreign investors incorporated in India in accordance with a well-defined investment policy.

 

The asset classes of an AIF may include private equity, precious metals, derivative contracts, and even real estate among the few. AIF, an excellent investment option if you have an investment corpus worth a crore and above, is also a great diversification tool in a portfolio. This investment avenue showcases innovation of financial products and customized services as its hallmark features.

 

Private Equity

 

India is a rapidly developing country that has turned into a hotbed of start-ups in various promising business sectors. Start-up culture is essential for our country’s economic growth as well as to give wings to the dreams of the young populace. In India, there are a good number of talented and skilled entrepreneurs who face the dearth of capital to launch their promising business projects.

 

An HNI can invest directly in a start-up or if it is the first time, he can provide capital to a start-up through a network of angel investors. HNIs can also invest in the private equity of the promoters of start-up companies and pull their money once the business project turns viable and set for Initial Public Offering (IPO). Always remember that successful private equity investments require some diligent research and market analysis.

 

Antique Trade

 

If you are a lover of art and culture with a deep pocket; then antique trade is an excellent investment avenue for you. Artworks of renowned artists and artifacts with historical relevance are great long-term investments. Modern and contemporary arts also garner investor interest these days. Art funds, though a young investment class, offer liquidity and can also be used as a significant investment tool to diversify a portfolio.

 

Crypto Currency

 

Crypto currencies are widely considered to be a very risky asset with tons of speculation surrounding them. The decentralization of the global financial system, and the attempts of governments worldwide to regulate the cryptocurrency market are among the few rumours in the air.

 

Anyway, the digital age is all about decentralization and democratization of most of the traditional establishments and professional sectors. Gauging the popularity, trends and growth of disruptive technologies — cryptocurrencies, without doubt, are assets of the future.

 

It is advisable that you should at least invest a tiny portion of your portfolio on the ‘currency of the future’. You can start investing in popular cryptocurrencies like Bitcoin and Ethereum. Then add new currencies to your portfolio whenever they are introduced to the market.

 

Bottom Line

 

The truth is most of the investors are in constant watch for investment avenues that can earn over the top returns as quickly as possible. That too, without the risk of losing the principal amount. In reality, an investment product that comes along with a combination of higher return and lower risk, unfortunately, doesn’t exist. Risks and returns are directly proportional in the market; that is, lower the risk, lower the return and vice versa.

 

The investment options described above are some of the best investment classes available in the market today. But, like every other investment venture, they have their own advantages and disadvantages. It is highly advisable that an investor should always choose the assets and allocate the capital carefully in accordance with his financial goals and risk profile.

 

– Justin Raj