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Finance Specialist Abhinav Angirish Decodes Alternative Investments For Wealth Creation

Investing your money can be an overwhelming idea, but it’s the only way to create wealth from your savings. And while the stock market, mutual funds and insurance companies provide various investment options, individuals with high net worth have a lot to gain from a more diversified portfolio — one that has unconventional investment as well. In conversation with TC46, Finance Specialist Abhinav Angirish, the founder of Invest Online, shares top alternative investment options, their eligibility criteria and risks associated with each.

1. An alternative investment is a wide world of investments

The world of investments is a broad one. There are various asset classes like bonds, real estate, precious metals, stocks, currencies. Even coins, stamps and paintings are considered investments. Even diamonds are considered as alternative investments. An alternative investment is a relatively loose term that signifies anything that helps to create and enhance wealth. Normally, alternative investments are those which are in sharp contrast to traditional investments.

2. VC funding is a form of alternative investment

As mentioned above, any investment that is not traditional and which enhances wealth is called alternative investment. Let’s say someone invests in forestry or shipping. Since both forestry and shipping help to generate wealth, they are considered as alternative investments. In recent years, private equity and venture capital funds have emerged as investment vehicles for wealth creation. Such investments can be termed alternative investments.

3. Interest in alternative investments is on an upward swing

In recent years there has been a surge in interest in alternative investments. The scenario of alternative investments is growing more complex, and worldwide fund managers are recognising the importance of alternative investments. The alternative investment market is estimated at $9 trillion and is growing exponentially. When it comes to investing, women have lagged behind. But the gender gap is fast closing as women have begun taking an active part in investments.

4. Alternative investing has higher rewards

Alternative investments are attracting investor’s attention. These investments are considered as vehicles of long term wealth creation. Even though such investments are marked with illiquidity, they are generally considered safe due to lower correlation with financial markets. Traditional stock investing can be highly rewarding, but it is also fraught with volatility and constant monitoring of one’s portfolio.

5. Alternative investments are mostly done by individuals of high net-worth

Since alternative investments are illiquid, most of them require a certain lock-in period. Also, due to the nature of the product, only high net-worth individuals can invest in such funds. For example, infrastructure funds are closed-ended funds with a minimum lock-in of three years and an option to extend for two years. Social venture capital funds have a lock-in period of three years and a minimum investment of Rs 1 crore.

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