Alternative Investments: Exploring Options Beyond Stocks and Bonds

The Indian Financial Market is now well-developed and gives you the luxury of choosing alternative investment opportunities.

When investors in India looks to expand his investment opportunities both in the financial sector and beyond, the general scenario that is highlighted to them are the traditional investment options that include bonds, stocks, and fixed deposits. Public Provident Fund (PPF) has become a new entrant into the preferred investment category. What you may not be aware of is that Indian markets offer you with considerable investment opportunities if you are seeking other alternatives for diversifying your portfolio.

With its rich experience of working with start-ups and SMEs in the financial sector, Moris Media, India’s top digital marketing agency, presents a route map that takes you on a secured journey highlighting various investment opportunities available.

Understanding alternative investing opportunities

Any financial or non-financial asset that does not fall into one of the standard or traditional investment categories accessible today is considered an alternative investment opportunity. Alternative investment alternatives, in general, are assets other than stocks, such as debt securities and cash instruments.

Today, there are several alternative investments accessible, including gold, real estate, venture capital and angel finance, and even peer-to-peer lending. In this section, we'll look at investing choices other than pureplay financial products.

When is it appropriate to invest in an alternative investment funds or vehicles?

If you are just beginning your investing adventure, you will most likely choose tried-and-true investment alternatives such as debt, stock, FDs, and other cash and cash equivalents. If your intent is portfolio diversification, it is always advisable selecting some tried and tested alternative investment opportunities, like gold and real estate.

And, as you have a greater understanding of how investments function, you may diversify your portfolio with more unusual assets such as art and antiques or even digital assets. This is not just it; you have other investment alternatives to choose from including angel investing or peer-to-peer financing.  

What are the most common sorts of alternative assets in which you may invest?

The world of alternative investment funds and choices is enormous, and it is continuously developing, as an increasing number of ordinary investors express a desire to diversify their portfolios beyond standard investing possibilities. Having said that, certain alternative assets are more popular than others.

Gold

Gold is dominating the alternative investment market as the most preferred choice. For years, it has been a favourite investment instrument for Indians. Physical gold, digital gold, gold ETFs, gold mutual funds, and even Sovereign Gold Bonds (SGBs) are all options to invest in the yellow metal today. When markets are turbulent, it is one of the safest alternative assets to invest in.

Property investment

Real estate is another long-standing popular alternative investment choice. The real estate investing industry has developed throughout time as well. Previously, the ordinary retail investor's first choice of investment was residential real estate. With REITs and other investment channels now available, investing in both luxury and commercial real estate has now been facilitated.

Digital possessions

In recent years, digital assets such as cryptocurrencies and NFTs have dominated the alternative investing industry. Because these parts are mostly unregulated, they do carry some risk. If you are game to have a portfolio that can endure these risks, Bitcoin, Ethereum and other cryptocurrencies are definitely worth investing.  

Collectibles

For ages, collectibles have been regarded as unique and unusual investment choices but this is now finding increased preference amongst retail investors. Art and antiques, as well as vintage automobiles and luxury products, are examples of collectibles. Because collectibles are valued based on their perceived worth, the alternatives are many and diverse.

Private capital

Listed equities is a high-risk investing choice in and of itself. Because there is no governing entity to regulate the private equity market, it is considerably risky. This is a wide category of investments that includes cash inflows to enterprises that are not publicly traded. Private equity transactions include, for example, angel investment and venture capital investing.

What distinguishes alternative assets and investing options?

Many of the alternative investment choices accessible today have particular characteristics that distinguish them from standard investing outlets. Here's a deeper look at the major characteristics of the alternative assets you may include into your portfolio.

Uncertainty regarding the asset's underlying worth

Alternative investment choices may be difficult to appraise since many of them depend on perceived value rather than real, asset-backed value. This is particularly true for exotic investments such as art, antiques, and luxury products.

Inadequate liquidity

With the exception of gold, most alternative assets have limited liquidity. This is largely due to the lack of centralized and regulated marketplaces for trading such alternative investment choices.

There is little link with traditional investing.

For the most part, unconventional assets do not have a strong connection with the markets or other typical investment possibilities. As a result, they may be quite beneficial in terms of portfolio diversification.

High initial outlay

The majority of alternative assets do not allow for fractional or lower investment quantities. For investors who want to add some of these unusual assets to their portfolio, the initial expenditure of cash is often on the higher end.

Finishing up

This summarizes the foundations of diversifying your investing portfolio beyond traditional assets. You now know when to take this step and have a good understanding of the many sorts of alternative assets accessible. However, the issue remains: why should you choose to invest in these options? Go to the next chapter in this module to get the solution to this question.

A brief recap

Any financial or non-financial asset that does not fall into one of the standard or traditional investment categories accessible today is considered an alternative investment opportunity.

Alternative investment alternatives, in general, are assets other than stocks, such as debt securities and cash instruments.

If you are just beginning your investing adventure, you will most likely choose tried-and-true investment alternatives such as debt, stock, FDs, and other cash and cash equivalents.

Start safe in your diversification journey; gold and real estate are recognised as the safest investments.

Alternative assets have a considerable degree of uncertainty about their underlying worth, and they are often not particularly liquid.

Furthermore, they have a poor connection with traditional investments and need a large initial expenditure.