Top Alternative Investments Promising Double-Digit Returns

Mar 22nd 2024

Top Alternative Investments Promising Double-Digit Returns: For the majority of people these days, stocks, fixed deposits, gold, and recurring deposits are usually the most preferred investment avenues. And due to their consistent and remarkable performance, it is quite easier to understand their popularity among people. But apart from them, several other investment channels have been gaining ground by allowing investors to get superior returns on their investments. Some of these fast-emerging investment options are real estate, P2P lending, vintage coins, hedge funds, inventory financing, private equity, venture capital, commodities, private debt placement, etc.

In recent times, it has been found that all prominent businessmen, HNIs, and wealthy people have been putting their money in these channels to get amazing ROI.

Compared to traditional investment channels offering 5-7% return on investment, these new-age investment channels offer 11-13% returns to investors. Another wonderful point about these alternate investment options is that they are not associated with stocks and other such elements which means there is lesser risk to investors. If you are looking to diversify your investment points, these options are worth exploring.

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In this post, we will delve deeper to learn more about these alternate investment options. You will get to know what they are, their pros and cons, and other elements.

1 Peer to Peer Lending

Also known as P2P lending, Peer-to-peer lending is a kind of financial system in which borrowers can get connected with lenders or investors directly on common platforms. This is a new-age money lending platform where borrowers can create profiles, upload docs, and get funding from various lenders given their eligibility. This system eliminates the need for conventional banks and NBFCs thereby distressing the overall functionality of money lending and borrowing.

Due to the easy and systematic functional structure of P2P lending platforms, they have become immensely popular these days. Borrowers need not get into the complexity of dealing with banks and NBFCs which is also time-consuming. Instead, they connect with a lender directly, negotiate on the internet rate part, and get the money right in their bank accounts quickly and easily. However, one thing that an investor must need to be aware of is the risk associated with P2P lending. There are two types of risk – default risk and fraud risk. Hence, it becomes necessary for investors to do detailed research before lending money to someone on any P2P platform.

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Some of the popular P2P lending platforms are Lendbox, RupeeCircle, and others that are preferred by a majority of investors.

Tips Before Investing Money in a P2P Lending Platform

  • Don’t blindly choose any interest rate that is offered
  • Seek references from family and friends regarding P2P lending experience
  • Do thorough research on the chosen P2P lending platform before getting involved
  • Prefer to lend to different borrowers to diversify the risk
  • Use smaller amounts at first to check the authenticity of the platform

2. Fixed Income Investments

According to the latest data, traditional fixed deposits are unable to provide returns that can match the burgeoning inflation rate in India. However, the industry has witnessed a rise in new businesses providing bonds, and several high-return income avenues to investors.

There are numerous high-yield investment products available to choose from like private bond placements, corporate bonds, AAA-rated docs, government bonds, etc.

Despite being sophisticated, some investment products of this type can be a bit complex if the investor is only concerned about the return he is getting. For example, there are a few platforms that offer senior secured bonds. The phrase ‘senior’ means the investor would get a priority regarding the payment of the principal amount along with the interest. On the other hand, secured means that these bonds are locked by a guarantee such as a gold loan which brings in a high level of protection.

The offering can be availed at a pre-tax average annual return of 11.5% for one-year bond tenure. As protections, these unlisted bonds were allocated against collateral of personal loans to salaried individuals. The final yield was programmed in such a way that 33% of the principal would be repaid every quarter along with the accumulated interest.

3. Invoice Discounting

In a typical scenario, people may discover a time lag between when a seller provides products or services and the receipt of the payment. The only way to deal with this is to consult banks or other financial institutions for vendors to look after the ongoing cash flow. The bank is then obliged to pay direct cash for these receivables at a lower rate.

Invoice amounts tend to touch the figures of thousands or even crores at present. By dividing an invoice into sizeable portions, these platforms allow investors to purchase a portion of the total outstanding invoice amount. Deal to deal, the minimum investment amount tends to vary greatly. However, there are instances where transactions kicked off at Rs 50,000.

The pre-tax average yearly return in such cases can reach the interest rate of 15 with an average tenure of 30 to 90 days. As far as risk is concerned, everything hinges on the reliability of the organization that is paying the vendor. In actuality, the investor has now purchased a portion of the invoice.

The payment entity's failures, payment delays, delivery problems, or legal concerns tend to hamper the returns and likely the receipt of the principal amount. The platforms providing this service make every effort to confirm the legitimacy of the raised invoice and the entity's payment history. They are also looking for post-dated checks and may even request a personal guarantee from the promoter.

4. Real Estate

In recent times, the real estate sector has shown amazing performance against the investments made in this industry. One option to invest in the real estate sector is through Real Estate Investment Trusts (REIT).

These trusts refer to businesses that own and manage real estate assets to yield funds. Such firms look after portfolios of high-value real estate assets and mortgages, commonly known as real estate investment trust firms. For instance, they receive payment against the renting of real estate properties.  The rent that was successfully collected was subsequently distributed to investors as revenue and dividends.

Though there are several ways to channel your money, you can choose the one that matches your needs the best. The selection of a particular path depends on your investment time frame, the amount to be invested, and others. For example, in a fast-developing region, you can easily buy a property at discounted rates and sell the same at high rates a few years later. This way, you can explore numerous other options and enjoy amazing capital appreciation.

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Is investing in the real estate sector safe?

Yes, considering the ongoing development in the infrastructure and market response, it can easily be determined that investing in real estate is a wonderful investment choice for both retail and institutional investors.

Are alternative investments successful?

Since alternative investments carry zero association with the stock markets, some investors are more inclined towards them in the event of a market slump because they may retain their value. In addition, tangible assets like gold, real estate, and oil bonds provide excellent inflation hedges. These factors make it a common goal for big organisations like family offices and pension funds to diversify a portion of their assets into alternative investment vehicles.

What interest rates are offered in P2P lending?

As per the recent reports, P2P lending tends to offer interest rates between 5 and 12% to a majority of investors.

The Conclusion

If you have capital to invest and you are willing to invest the same in a high-yield investment tool, the aforementioned options can be worth considering. Many like you who have been leveraging these tools with the purpose of embracing unmatched capital appreciation. However, make sure you take into account each & every aspect before investing money in any of these investment tools so as to ensure both safety, security, and value.


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