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Alternative Investment Introduction: The Complete Guide

15-09-2022 |

Investments come with diversity. Diversification is a crucial aspect of investment that emphasises minimising losses and reducing risks. This is why one requires alternate modes of investment. Alternate means of investment options are unique and different from traditional investment schemes.
 

Find out more about these investment options below.
 

What are Alternate Investments?


Alternate investments are different investment options than traditional ones. These are choices other than conventional ones like bonds, cash, and stocks. A few types of alternative investment funds include tangible assets like private equity, hedge funds, etc.


Usually, alternate investments have a minor correlation with classic assets. However, alternate investment schemes can bring along various complicated valuations. Hence, it would help if you were cautious while investing in your future and goals. 


What are the Various Kinds of Alternative Investment Funds In India?


There are many options for alternate investments, so it can sometimes get overwhelming to make a choice. Here is a list of choices that can help you pick a suitable investment for your needs.
 

  • Equity mutual fund

    Equity mutual funds are alternate investment schemes that allow investments in different companies' stocks depending on the scheme's objective. Equity mutual funds are an excellent opportunity to diversify across the verticals of various industries and sectors.

    Equity mutual funds can be invested via systematic investment plans (SIPs) or lump sum amounts. You can achieve inflation-beating returns in the long run with equity mutual funds as you get to leverage the expertise of proficient fund managers. 

  • Debt mutual fund

    Another alternate Investment option in India is debt mutual funds. Debt mutual funds are plans that invest in fixed-income instruments like debt securities, corporate bonds, government bonds, and money market instruments. One of the advantages of investing in a mutual debt fund is portfolio stability. It also offers a prudent investment avenue where you can park money for emergencies. Similar to equity mutual funds, you can invest through SIPs or in a lump sum. Debt mutual funds are great alternatives to fixed deposits where the interest rate has taken a dig off late.

  • Public Provident Fund (PPF)

    A PPF is a government-backed scheme that comes with a fifteen years lock-in period. It offers partial withdrawals subject to conditions. You can open a PPF at the post office or any bank. PPF contributions offer tax* exemption under section 80C of the Income Tax* Act, 1961. The maturity corpus of the fund is free of tax*. PPF is known to be ideal for developing a fund for key goals like buying a house, higher education for kids, retirement, etc. 

  • Direct equity (stocks) 

    Stock or direct equity refers to the ownership units in a company. While investing in direct equity, you purchase partial ownership of the company. You can invest in direct equity with the mindset that the value of the company's stock will build up with time.

    Companies issue stocks to grow their business and raise money. If you can understand and track market movements, you can consider investing in direct stocks. In the long fight, direct equity can help you achieve inflation-beating returns. If you plan to invest in direct equity, you would require a trading and Demat account with a registered broker. 

  • Fixed Deposit

    Fixed deposits have been the right investment option for most people in India. These are latent to market volatility and offer assured returns. NBFCs, corporate houses, and banks provide FDs. Senior citizens get  interest rate returns in the case of FDs. The market also offers tax*-saving FDs, such as the five-year FD, where you get tax* redemption on investment under the Income Tax* Act, 1961.

  • Chit funds

    In 1982, the Chit Fund Act got forward the rotating savings scheme known as chit funds. These are different from Ponzi schemes. They come with minimum paperwork and offer you quick access to money. However, before you plan to invest in chit funds, make sure the company is officially registered. You should also research the company's promoters and ensure they are financially stable. In addition to this, it is equally important that you keep contributing throughout the fund cycle. 

  • Real Estate



    Real estate is yet another alternate investment scheme. This is a rare investment where your investment is not readily convertible into cash. However, if you make a sound investment in real estate, you are open to high chances of significant capital appreciation in the long run.

 

  • Gold

    If you look for safe investment alternatives, you can opt for investing in gold. It is a safe investment alternative that offers you real returns against inflation. However, you can invest in gold exchange-traded funds (ETFs) or sovereign gold bonds (SGBs) instead of purchasing physical gold. This is ideal because SGBs and ETFs do not have storage and purity issues, unlike physical gold. In addition, there is also a chance of capital appreciation. 

  • Sukanya Samriddhi Yojana (SSY)

    It is a small deposit scheme backed by the govt. of India. It targets fulfilling the requirements of a girl child. It was launched as a component of the 'Beti Bachao, Beti Padhao' initiative and comes with benefits under Section 80C. You can invest in the SSY scheme as soon as a girl child is born until she turns ten.

    From the opening date, the account is operational for twenty-one years or until the girl gets married. If you require funds for the education of the girl child, you can withdraw 50% of the fund after she turns eighteen.
     
  • Life insurance

    India has a vibrant Life Insurance Sector. You can look at the Tata AIA Life Insurance Plans and get an idea of how to spend your money in a plan that offers returns along with life insurance coverage. Some insurance policies offer you great returns in the long run while also offering life cover. If you desire to buy a scheme that secures your family, you can opt for a life insurance plan. 

Conclusion


There are ample investment options in India that enable you to save your hard-earned money. Now that you know briefly about the alternate investment options in Indiayou can easily pick a suitable choice to invest your money in.


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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.