The dropping of fixed deposit interest rates in banks has forced investors to diversify and invest in options that can yield higher returns. According to market experts, the pandemic has also caused a shift in consumer behaviour, with investors focused on passive income investments rather than speculative assets that solely offer capital gain opportunities.
Some of these new-age investment options gaining traction are investing in peer to peer (P2P) lending and fractional real estate investment.
According to Bhavin Patel, Co-founder & CEO, LenDenClub, these new-age technology platforms are fast emerging in India with increasing digital adoption.
“Millennials, being digital natives, have been particularly driven towards these newer investment methods given end-to-end online fulfillment, simplicity of platforms, and higher yields. The last one and a half years have further boosted the advent of investment tools agnostic to market volatility. The current crop of investors believes in being active drivers of their portfolios and tech-driven alternatives which provide them with higher yields vis-a-vis traditional instruments like FD. I am sure that the coming years will revolutionise the way Indians have been looking at investments,” said Patel.
While talking about different options, Sudarshan Lodha, Co-founder of Strata, said that investment in commercial real estate has been one such evergreen investment option for the UHNIs (ultra-high-net-worth individuals) and institutional investors. However, with the introduction of the fractional investment model, many retail and NRI investors are moving towards this high return-yielding asset class.
"Fractional investment has made commercial real estate investments affordable. The option brings in monthly income right from the start of the investment, and the investor enjoys better capital appreciation than other property investments. This is emerging as an intelligent way of investing in real estate,” Lodha added.
Another avenue that is gaining impetus, according to Gaurav Dahake, Founder & CEO, Bitbns, is cryptocurrency.
“Cryptocurrency is gaining popularity because of price appreciation and passive income that investors get to earn through staking. Staking, in easy words, is lending the held cryptocurrencies to the exchanges to validate transactions and, in return, earn some extra coins. Crypto staking is a new, cost-efficient, and profitable way to ensure passive income for crypto investors. Unlike fixed deposits, where investors' money gets locked for a specific period, in staking, one can do trading anytime and earn rewards while holding with the exchange. One can earn an annual return of in the range of seven perecnt to 16 percent in staking,” Dahake stated.
With passive investment, individuals can start making returns from the very consecutive month of investment and earn a decent passive income month on month. Besides, investors can do a lot to mitigate the risk and can control their investment by creating a diversified portfolio with investments across different interest rates, cities, gender, purpose, type, and by spreading their risk via small-ticket investments across products.
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First Published: IST