Introduction

Investing is often likened to the world of entertainment, where choices and decisions can yield unpredictable outcomes. Just as Bollywood stars captivate audiences with their performances, investment products capture the attention of investors seeking financial growth. In this intriguing analogy, we’ll explore various investment products by comparing them to Bollywood stars, considering factors such as risk, returns, tenure, and more.

Fixed Deposits – The Amitabh Bachchan of Investments

Much like the evergreen superstar Amitabh Bachchan, fixed deposits are reliable and have stood the test of time. They offer a safe haven for investors with a low-risk appetite. Fixed deposits are known for their stability, providing moderate returns over a fixed tenure. Just as Amitabh Bachchan’s performances continue to be cherished by generations, fixed deposits consistently deliver steady interest income.

Mutual Funds – The Shah Rukh Khan of Investments

Shah Rukh Khan’s versatility mirrors the diversity of mutual funds. Mutual funds pool money from various investors to invest in a mix of assets like stocks, bonds, and more. Like SRK’s diverse movie roles, mutual funds offer a range of options from equity to debt funds, catering to different risk preferences. The returns and risk associated with mutual funds vary depending on the fund type, akin to SRK’s ability to excel in different genres.

Stocks – The Ranveer Singh of Investments

Ranveer Singh’s energy and charisma can be compared to the dynamism of stock investments. Stocks represent ownership in companies and can be volatile, much like Ranveer’s unpredictable roles. Stock returns can range from spectacular to disappointing, mirroring the highs and lows of the actor’s filmography. Investing in stocks demands research and timing, just as appreciating Ranveer’s performances requires an open mind.

Real Estate – The Aamir Khan of Investments

Aamir Khan’s meticulous approach to roles is akin to the careful consideration required in real estate investments. Real estate offers long-term appreciation potential, reflecting Aamir’s well-thought-out movie choices. However, just as Aamir takes time between films, real estate investments can have a longer holding period. Both demand patience and research, with the promise of substantial returns in the end.

Gold – The Madhuri Dixit of Investments

Madhuri Dixit’s timeless grace is reminiscent of the stability of gold investments. Gold has historically been a store of value, much like Madhuri’s enduring popularity. It serves as a hedge against economic uncertainties, offering a sense of security to investors. Just as Madhuri’s charm transcends generations, gold’s allure remains steadfast in the ever-changing financial landscape.

Cryptocurrencies – The Ranbir Kapoor of Investments

Ranbir Kapoor’s youthfulness aligns with the novelty and risk associated with cryptocurrencies. Cryptocurrencies like Bitcoin and Ethereum have gained attention for their potential high returns but also come with considerable volatility. Just as Ranbir’s roles push boundaries, cryptocurrency investments challenge conventional investment norms, appealing primarily to those comfortable with risk and uncertainty.

Conclusion

Investing, much like Bollywood, is a realm where diverse options cater to various preferences. Just as Bollywood stars captivate us with their performances, investment products capture our financial aspirations. Understanding the risk, returns, tenure, and characteristics of each investment is vital before stepping onto the stage of financial decision-making. Whether you choose the reliability of fixed deposits, the dynamism of stocks, the versatility of mutual funds, the solidity of real estate, the timelessness of gold, or the innovation of cryptocurrencies, remember that every choice has its own unique appeal, just like our favorite Bollywood stars.

Everyone talks about the Money, Investments, Wealth, Savings, Portfolio and also knows the importance of the same. But creating a wealth, building a portfolio is it that easy? The answer is Yes and No both. May be someone can start the investment process by getting influenced through various sources but to keep that continue for a long period and constant inflow of money is the biggest task which everyone cannot carry.

Building an investment portfolio can seem intimidating to those who are just beginning their investment journey. It can be challenging to set aside sufficient funds each month, while also budgeting for various expenses such as rent, equated monthly instalments (EMIs) for vehicles, and other obligations. However, the earlier you begin investing, the more time there is for your portfolio to mature and grow.

The most important aspect of building a portfolio is to balance growth opportunities with risks. The trick lies in understanding your own risk appetite while building a diversified portfolio and also investments should be mapped along with a specific goal. Selecting investments and diversifying your portfolio complement each other or they look similar at times. You should choose investments diligently if you want to diversify your portfolio well. If you want to diversify your portfolio you should pick investments judiciously.

Warren Buffet said, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”

Criteria to Choose Investments

Answer the following questions before you sit down to pick your investments. What is your investment horizon? What returns are you seeking to achieve? What amount of risk are you able to take? What amount of funds are available for you to invest? What are the goals of these investments? The answers will guide you toward making intelligent investment decisions.

You may start with the breakdown of your proposed investments between cash, Equity (Shares, MFs, ETFs), fixed-income securities, and Alternative investments. The breakdown of your asset allocation ultimately depends on your risk tolerance and expectation of the returns. Now so many options are open and available for a Retail Investor to start an Investment journey.

Underlying Factors to be considered

There’re only two ways to create a wealth, one is to constant money inflows and give time till the targeted period without any fail for a long term. Products, returns, risks all are secondary factors to look upon. Some important factors those need to be considered as part of your investment filtering process are:

Tenure

You should evaluate the investments from the angle of return and growth in the short-term and long-term horizons to help you take an ideal decision. To put it in another way, this is a growth vs income option – short term is income and long term is growth which can give you tremendous returns through compounding.

Goal or purpose

You should have a clear-cut financial goal for your investments. In other words, life milestones like wanting to build a corpus for a child’s education, buying a house, planning for retirement, etc. are examples of your goals.

Liquidity

No doubt that cash is the most liquid investment but it comes with no return or growth, rather it depreciates if held for long period. Some assets like real estate may provide higher returns, but is a most illiquid asset. Clarity on your goals and horizon will help you make decisions on investments based on liquidity.

Risk

Arguably the most critical factor. The risk and return go together. The more the risk, the more the return and vice-versa. The choice of investment should match your risk profile. A conservative investor would not be comfortable investing all or a large portion of his/her money in high-risk investment options.

Taxation

Certain types of investments are tax-efficient. However, investments in such instruments should be a part of your overall financial planning and not the ultimate purpose of your investment. What you count as your return should be your post-tax return.

Investment Strategy

Investing your money without an investment strategy is like a sports team going into a game without a game plan. Having an investment strategy will help you discard many potential investments that may result in loss or that are not ideal for achieving your goal.

It is also important to quantitatively figure out your goal. Simply stating that you want to make money or maximize your wealth is not an investment strategy but something like having a corpus of a certain amount to retire by a certain age is a specific and quantitative investment strategy.

You must decide what type of investment you need to make to achieve your financial and life goal. Here are some of them:

Value Investing

The principle behind this investment strategy ‘buy and hold’ made popular by Warren Buffet is – to buy shares that are cheaper than they should be and hold them for a few years to enjoy the power of compounding in the returns.

Income Investing

Income investing involves buying securities that generally pay out dividends and return regular fixed income. Bonds, debentures, bank and money market deposits are the best-known examples of fixed income products, but dividend-paying shares, ETFs, MFs, and Indexes are other forms of income investments though they are not fixed-income.

Growth Investing

Growth investors focus on companies that generate above-average growth, through revenues and profits, even if the share price appears expensive in terms of metrics such as price-to-earnings or price-to-book ratios.

Socially Responsible Investing

Also known as environment, social and corporate governance (ESG) and Impact Investing though not strictly the same, this is about investment in socially responsible companies that make a profit. SRI is one path to seeking returns that benefit everyone. India is the first country in the world that has made CSR mandatory for companies that have crossed a certain threshold.

Different Avenues:

Different Investment options to start your Investment Journey:

• Direct Equity
• Mutual Funds & ETFs (SIP or Lumpsum)
• Alternative Investment options
• Fixed Income generating options
• Gold/ Silver

The purpose of an investment portfolio is to ensure your financial stability and independence. It allows you to plan for emergencies, ensure regular income, and provide you with the financial freedom to meet your expenses. By setting aside adequate savings each month, we also gain financial discipline and the self-confidence for making judicious decisions regarding finances and future planning. One should make his investment portfolio in such a way that after some years that portfolio should start generating some passive income to the investor.

Happy Investing

Overview

Why should one need to Invest? Investing ensures present and future financial security. It allows you to grow your wealth and at the same time generate inflation-beating returns. You also benefit from the power of compounding.

In India when we think about Investments, generally we go for the products like Equities, Mutual funds, bonds, Fixed Deposits, commercial properties, land, etc. So these all are traditional or conventional products which are being used for the investments purpose. All these popular products have their own pros and cons and Investors still need some better solutions for the cons.

Why to consider investment in AI?

Diversification is one of the fundamental principles of investment. It reduces risk and helps in minimizing the losses. This is where your portfolio needs Alternative investments in your portfolio. These investments are a little different from traditional ones, and prudent investment in them can help you achieve various life goals. With low correlation to traditional asset classes, alternatives can be a beneficial way to diversify your portfolio. An alternative investment is a financial asset that does not fit into the conventional equity/income/cash categories.

Alternates VS Conventional/ Traditional

In India initially debt and fixed income products were generating inflation beating returns and people were also very fine and happy with it. In equities and kind of products they are getting a good double digit returns for wealth creation but that also come with high risk and volatility which many of Indian Investors don’t prefer. That is where the need of Alternative Investment arrives, where an Investor gets equity kind of returns at debt kind of managed risk. Let’s say, under the fixed income space Investors are getting max around 7-8% p.a. (safer investments like Bonds, FDs, other deposits, etc.) and in equities they are getting returns in long term on an average around 12-16% p.a. range but along with good amount of risk and volatility. Now here the need of Alternative Investment arrives to fulfill the gap between 8%-12%, a risk adjusted returns at which most of the investors want to grow their portfolio.

Need of Alternative Investments

• Alternatives rely less on broad market trends and more on the strength of each specific investment; hence, adding alternatives can potentially reduce the overall risk of a portfolio. With low correlation to traditional asset classes, alternatives can be a beneficial way to diversify your portfolio.
• High Net worth Individuals (HNIs) who are looking to expand their investment portfolio can consider investing in AIFs, as the return potential is very high, accompanied with an equivalent amount of risk. AIFs invest in securities that go beyond the traditional investments such as stocks, bonds, mutual funds, etc., paving a way for investors to expose themselves to alternative securities that deliver higher returns.
• Initially the alternative baskets were only available to HNIs and UHNIs in the form of AIFs. Now the individual components of AIFs are available to retail public too in the form of various alternative investments options. So now a retail investor can also take exposure of Al with lower ticket size.
• A traditional “60/40” allocation to equities and debt may no longer be enough to meet long-term investment goals. Alternatives can help to lower volatility, enhance returns and broaden diversification of a portfolio.

Types of Alternative Investments:

Are Alternative Investments Safe?

Every investment whether it is traditional or new aged, carries its own benefits and risks. Mostly Alternative Investments are not regulated but there are few which are regulated by the regulatory authorities like RBI, SEBI, etc. Therefore, it is important to invest with the advice of a trusted “Financial Advisor” or do your proper due diligence if investing on your own.

Benefits

• Regular passive income
• Lack of volatility
• Broader Diversification
• Tailored and Structured as per requirements
• Uncorrelated to the Stock Market
• Direct ownership
• Tax benefits
• Easy access and usability

Risk

• Lack of Liquidity
• Higher ticket size
• No standard valuation methods
• Lack of regulations and controls
• Lower public acceptance and not guaranteed returns

Conclusion

Alternative investments are one of the best ways to diversify your portfolio. Most alternative investments can generate passive income, which can be useful for post-retirement expenses and for paying recurring subscriptions and bills.

One should diversify upto 20% of his/her total portfolio to Alternative investment Options. Though Equities and other asset classes will give good returns but in next decade “Alternative Investment Options” will be in core focus and emerge as one of the best Investment options.