There is a common belief that investing is a journey of self-discovery. It reveals your relationship with money, your tolerance for risk, and your ability to stay disciplined in the face of uncertainty. When we look at the investment opportunities presented in India, we are looking at a stable government that offers excellent business-friendly policies and a promising future. The country is poised to be a rare bright spot despite a tough macroeconomic environment and a slowing global economy. Investment companies have highlighted how multi-asset allocation strategies will be key to generating sustainable market-beating investment returns.
Thus, many believe that higher rates and greater volatility define the new regime. It’s a big change from the decade following the global financial crisis. Investors could rely on static, broad asset class allocations for returns – and gained little advantage from differentiated insights on the macro outlook.
In simple terms, to grow one’s wealth one can never time the market but it’s the amount of time your funds spend in the market that matters. An investment portfolio is as complex as marriage (on a lighter note). Several factors are at play such as age, risk appetite, purpose, earning capacity, understanding of the available options and guidance from elders among many others.
An evolving landscape
In the ever-evolving landscape of wealth management, young Indians with higher disposable incomes are forging their own, distinct path to growing their riches. They are seeking out investment opportunities in alternative avenues that encompass a range of options including real estate, start-ups and passion projects.
The time for traditional investment opportunities such as fixed deposit, chit funds, Gold, and Post Office schemes to government schemes is long past. They may be the beginning steps to opening to more conventional options of mutual funds, stocks and equities. Today’s generation is diversifying their investment portfolios across a spectrum of sectors and are exploring opportunities that go beyond traditional products.
This is because the bull case for India is hard to ignore. Take India’s growth – the country ranks among the world’s fastest-expanding major economies. After rapid economic growth of 7.2% in the 2022-23 fiscal year, India’s GDP growth rate in the fiscal year 2023-24 is forecast to be 6.9%.
A diversified outlook
Today, individuals have a plethora of investment opportunities unlike in past years. For simple understanding, any investment portfolio is normally divided into debt and equity, wherein debt includes fixed deposits, and government bonds, which are safe and give you a low rate of return. However, in equity the risk is higher and the returns are higher too. This all depends on the market conditions and performance of companies.
Equity can be further subdivided into stocks and mutual funds. In mutual funds, the risk factor is lower as the professional fund manager invests in a basket of stocks keeping your capital safe while on the other hand, stocks are highly volatile and come with a high element of risk.
The next best bet is investment or diversification of your investments in real estate or the Bullion (Gold or Silver investments) which provides you with a steady flow of income. Several modern-age investment opportunities look lucrative but one has to tread with caution in investment opportunities such as Bitcoins and NFTs as they are not yet regulated by the government.
Real estate investments are being perceived as a promising avenue for Indian High Net worth Individuals (HNIs) to diversify their investment portfolios. Diversification can be achieved through various segments, such as residential, commercial, retail, and warehousing. Investors can expect to reap substantial returns. According to Moody’s, India’s real estate sector is currently moving in an upward trajectory and is expected to reach a value of US$1 trillion by 2030. The report further suggests that India’s real estate industry is poised to be one of the best in the world.
As the real estate sector undergoes continuous evolution, the importance of being well-informed and making informed decisions cannot be overstated, as it can lead to substantial returns, making it an attractive prospect for those seeking to expand their investment horizons.
Finally, it is also noticed that Ultra High Net Worth Individuals (UHNI) are increasingly turning towards non-traditional ‘passion’ investments such as collectable assets like fine art, vintage cars, yachts, and wine. These investments, while providing aesthetic and emotional satisfaction, also have the potential to yield impressive returns.
(By Chirag Mehta, Founder, Arbour Investments. Views are personal)