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Overdose of Investment Advisory – How to Deal With It?

It’s the age of hyper-connectivity. We are more connected to each other than ever before and also, more connected than required. With information flowing from all directions, more people are aware of things. Or, do they just ‘know’ about it without any comprehension of the basics?

More advisors than money

We should know that too much information has given rise to too many self-proclaimed experts. Of course, for a long time, there have been big investors who nudge people to take some action by dropping subtle hints. We can’t forget the experts on business news channels, can we? To make matters more complex, the latest breed of experts are the influencers who flood social media with their unsolicited financial advice.

The problem this over-supply creates is that it creates a grey area between the genuinely good advisors and the ones who are not. That’s the area where most investors get stuck because the ones who give great advice charge a lot and the thought of ‘growing money’ and ‘Rs. 10 to Rs. 10 lakhs’ are too tempting for small ticket investors to let go.

#investment

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Leasing: An Alternative Investment Product

Fixed-income products with equity-like returns

Leasing is a simple contractual arrangement calling for the lessee (user) to pay the lessor (owner) regular payments in exchange for the use of an asset over an agreed period of time. Buildings, vehicles, and equipment are among the most common assets that are leased.

Benefits to Investor

• Opportunity to earn a high fixed return for a specified period of time • Leasing adds to portfolio diversification by giving a chance to finance different asset classes • Easy way to provide exposure to different asset classes such as real estate, vehicles, construction equipment, medical equipment, E-battery infrastructure, furniture/fixtures, laptops, etc., • Mitigating the risk investors face by parking all their money in single or fewer investments

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#alternative investments

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Alternative Debt Options for New-age Companies

But while banks do offer short-term loans, sometimes they need a guarantee or large collateral to extend the loan. In addition, banks frequently have enough exposure to certain sectors and therefore have limitations in lending to certain companies. And, even if they do manage to give the loan, companies may realize that they need more money after commencing the project, in which case there is a lot of rework needed to add incremental funds to the sanctioned limit. In such scenarios, raising funds for a short duration, or for a specific activity could become a tedious and time-consuming process.

Newer funding options

However, thanks to a larger investor market, favorable regulations, and technological advancements today, there are a lot of other funding options available to enterprises for raising money in the form of debt.

According to the Reserve Bank of India, businesses today are increasingly relying on private placement for debt financing. And why not? The cost of private placement is less than one-sixth the cost of a public placement!

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#alternative debt

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What Is Commercial Paper – The Beginner’s Guide

What is Commercial Paper?

Commercial papers are debt instruments issued by corporations to finance their short-term liquidity needs. These liquidity needs can be for funding working capital, enabling operations or financing inventory, or meeting payroll expenses. Of late, it is gaining in popularity as a fixed-income investment in India.

Why do companies issue commercial papers instead of borrowing from banks?

Companies issue commercial papers as a form of short-term financing because it is a source of diversified and flexible fundraising from individual investors.

Who can issue commercial papers?

Banks, NBFCs, financial institutions, foreign corporations, and other such entities issue commercial papers. The issuer entities generally undergo the due diligence of credit rating agencies like CRISIL (Credit Rating Information Services of India Ltd.), ICRA (Investment Information and Credit Rating Agency of India Ltd.), and CARE (Credit Analysis and Research Ltd.) to evaluate their credibility and financial health.

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Evolution of the Investment Ecosystem and the Rise of Alternative Asset Classes

Here’s an interesting fact though: Just 5 years ago, the AUM was less than half of this, at roughly 18 lakh crores!2

Yes. That’s the kind of phenomenal growth that Mutual Funds have seen in India.

A lot of new investors may not know this, but Mutual Funds are not a recent product. The Mutual Fund industry in India started way back in 1963 with the formation of UTI – that’s about 60 years ago. But Mutual Funds as an investment product didn’t catch up with retail investors until recently. In fact, the last decade itself saw a 5X growth in the industry’s AUM.

For retail investors, Mutual Funds are a good way to start their investment journey. They’re simple products, where you give your money to the Mutual Fund house, which professionally manages it and invests it across debt, equity and other products, depending on your goal and the fund house’s objective. Taking the SIP mode is a great option when it comes to Mutual Funds since regular, periodic investments take care of volatility in the market and average out your returns. And over the long term, most equity funds tend to give average annual returns between 12-20%, which are great numbers to look at!

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#Alternative investment

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Why Invest in Alternative Investments?

Many investors believe that investments are limited to stocks, mutual funds, bonds, etc. While these traditional investments work for many, a very niche set of investors knows that there’s a lot more potential with Alternative Investments.

What are Alternative Investments? Why don’t many investment education channels talk about them? What are the benefits of alternative investments? And how can a beginner invest in alternative investments? Read on to get answers to these questions and more in this blog:

What are alternative investments?

Any non-traditional asset or investment strategy is teamed with alternative investments. Confused?

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#Alternative investments #Bonds #finance