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POSTED BY ON February 26, 2014 8:58 am COMMENTS (10)
Hi Everyone
I wanted to open a discussion on alternative investments with the aim of generating high returns.
The fact is no one becomes a millionaire by investing in MFs .. the best MFs can do is ensure a comfortable middle class retirement for you. But if you want to build real wealth, you have to go beyond (and of course take more risks).
So the next option is direct equity where you can get slightly more return but unless you are the next Buffet, not much more than MFs. On the other side we have AIFs which invest in private equity and can generate 25% plus returns, but minimum investment there is 1 crore as per SEBI rules.
Are there any other options (say for about 5 to 25 lacs of investment)
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Dear Rokhan, no you are not crazy. 🙂
In case of direct Eq. you need to invest a lot of time also along with your money to research before investing a single paisa. 🙂
In case of MFs, at least things are not that much complicated.
Thanks
Ashal
Dear Ashal
Thanks for your response. It is exactly the information I was looking for.
Guess I am sticking to MFs for now (since thats my only option at the moment) and will do so with at least the first 25-50 lakhs of my corpus. I want to park another 50 lakhs in a potentially higher return category (5 year plan) which I have yet to identify.
I dont believe in gold investments (since I dont understand why should gold even have any value, much lesser inflation beating growth in value). I am also not keen on real estate since there is too much hassle and too much ambiguity with regards to valuation.
So yes, these are the options I am left with – MFs and Direct Equity. Does that sound ok, or totally crazy?
Dear Rokhan, My original reply was meant for your comment that MF investing is boring and it can not make you rich overnight. Yes it’s boring but over the period you ‘ll get the benefit of long term compounding. The problem with compounding (yes problem is not with investors :)) is, it takes a lot of time to show the result.
Now coming to your discussion with dear Manish’s reply, you do not have big ticket money to join any PE/VC fund at the same time, do not want to do any hard work to find the people like that vada pav seller who can use your money to generate profits for both. Now in this situation my dear friend, boring MFs are your only option. 🙂
Thanks
Ashal
Dear Arun and Manish, thanks for your replies.
Manish, I agree with you. In fact, I dont think what I am looking for with AIFs or similar is any different. I just dont have access to people who need financing and then will be able to generate returns and pay my share honestly.
With Private Equity and Venture Capitals, the PE/VC managers are supposed to evaluate the feasibility of the businesses and then ensure accountability from management. But then, here I dont have the capital required to get in 😛
I would suggest investing money in some local business in joint venture with some one who has time and talent but not money .
I know a guy who had put Rs 50,000 with his jobless friend to start a vadapav stall . His friend works full time and they share 50-50 . They now make close to Rs 10,000 per month each (total 20k profit) , Now this is not a big ticket investment , but the return from this is obsecene ! . Rs 50k investment and getting it back in 5 months and then for many more years . This way you need find people who can put time and effort , but dont have money. You can put Rs 5-10 lacs in some business like this
This is risky, but huge potential
Manish
Dear Rokhan
Its really going to be interesting to know those alternatives.
Everyone knows that in Today’s market whatever returns comes with guarantee is FD, RD, Bonds, PPF etc with maximum Tax free returns in the range of 9-10%.
MF and Stocks are next with high risk and High Returns.
In my opinion the next option is real estate. It needs an intensive research of this market, finding out the type of property (Land, Flat, Individual House or Commercial) and again the sufficient money to invest.
It may reap you returns to the tune of 20-40% but its all a bet which you may loose or may win. 2009-10 was the time when property had seen very good returns ( I observed it in NCR region).
Many of people are not able to do this investment as it needs a good amount of lump sump investment and then sometimes wait for good time period.
However if like minded people, having mutual trust in each other, pool their money after sort listing a expected good return property, they may reap the benefits of it.
Regards
Arun
Ashal, no no not jumping ships here, but for education purpose (and to plan a bit ahead of time) 😛
Just curious to know what is there beyond the horizon of what we discuss here everyday.
Dear Rokhan, I think you become graduate by your age 5Y and post graduate by the age 6Y? Are you getting it what I mean? 🙂
Thanks
Ashal
@Raja, not sure if that is going to be a net positive cash flow or negative 😛
Spend that money on designer clothes, luxury cars and get married to the only girl from a wealthy family. Your investment will reap results in future 🙂