Should You Go for Alternate Investments?
Fixed deposits, gold, stocks, mutual funds, and government schemes are the most common investment tools for most of the people. But, do you know that there is a whole world that exists outside of these products too? These are Alternate Investments.
What are Alternate Investments?
As the name suggests, alternate investments are different from the traditional ones and cannot be classified into traditional categories. They typically include peer-to-peer (P2P) lending, unlisted securities, fractional real estate, venture capital, hedge funds, SME funds, social venture funds, infrastructure funds, angel funds, private equity funds, private investment in public equity (PIPE) funds, real estate funds and distressed assets. They generally adopt complicated trading tactics and may involve leverage, including investing in public or unregistered derivatives, and would unequivocally get classified as highly risky.
What are the Advantages of Investing in Such Asset Classes?
- Portfolio Diversification: Investing in alternate investments provides diversification to the portfolio typically for those having large assets and large investment portfolios.
- Unrelated to the stock market: Such investments generally have a low or very low correlation with the stock markets. As a result, the market volatility has less of an impact on them. However, they would have their own volatilities and risks.
But wait, before you jump to making a decision, you need to consider the following things in mind:
- Be aware of the risks: One should be aware of all the risks associated with any of these products that you decide to invest in. The risks involved, visible and invisible, should match your risk profile.
- Understanding the Product’s Complexity: Investors should carefully examine factors such as tenure, liquidity, credit worthiness and manner of operation of such asset classes and funds before choosing a product.
- Alignment with Goals: Make sure that your investments are in line with your financial goals.
When considering overall asset allocation, it is prudent not to exceed 5-10% exposure in such alternative investments, if at all.
(Contributed by Yogesh Gola, Associate Financial Planner, Team Vikrant, Hum Fauji Initiatives)
How Will Credit Card Linkage With UPI Benefit You?
Do you use credit cards? How many cards do you have right now in your wallet? Credit cards can be a handy companion for life – irrespective of the life-stage, lifestyle, or experiences you want to dive into!
But carrying a credit card with you is carrying a risk too – there is always a chance of fraudsters looking for it.
Recently, one of the surprising decisions taken by the RBI was to allow the linking of all RuPay-enabled credit cards with the ubiquitous UPI (Unified Payments Interface). UPI is the most popular payment system in India that allows customers to make real-time bank transfers by linking their savings or current accounts with debit cards.
The major advantage of this linking is UPI’s widespread acceptability across the country. Also, no special ‘credit card machines’ are now required since retailers can take payments using a QR code or through a registered mobile number. Let’s see how this is a win-win for both consumers and merchants:
Payment will become easier, especially in semi-urban and rural areas, since even small merchants have UPI QR code-based acceptance now.
It will also help you to get credit card reward benefits along with the ease of use and security of UPI.
The risk of carrying a card will be reduced, and it will also promote achieving a cashless economy.
Ultimately, this is a smart move by the RBI. The transfer and acceptance of the money will be easier and the chances of fraud will be much reduced.
(Contributed by Nidhi Dogra, Associate Financial Planner, Team Arjun, Hum Fauji Initiatives)
Empower Your Parents by Making Them Tech Savvy
Parents play a really big role in our development, whether it be in the area of well-being, body, society, finances, or career. They support us at every turn in our lives. We too have a responsibility to give them a present that will not only help them become independent and empowered but also to keep up with the times.
Here are some of the ideas:
1) Banking on TechNet: It has been unsafe and inconvenient for our parents to visit their bank for every transaction and service during this COVID crisis and even later. So teach them how to do mobile banking even if it seems alien to them initially. Be patient and write down each step for them, including the user name and password. Supervise initially to build up their confidence and then they will easily carry out all transactions from the safety of their home.
2) Help them to operate home delivery apps: Does your mother still visit the local vegetable vendor or kirana shop, whether she wants to or not? In spite of being short of time? Download a few home delivery apps on her phone and teach her how to use them. If she is uncomfortable with online payment, she can pay by cash on delivery. She would love it once she gets used to it and more importantly, gets used to shopping without physically touching things.
3) Enable them to pay all their utility bills online: If you teach them how to pay utility bills through wallets like Paytm, it’ll hugely ease your father’s burden of depositing a cheque or failing to meet the payment deadlines.
4) Gift them a fitness band: This may seem farfetched but works with a lot of seniors now. It can help them keep an active track on their health and focus on their own wellbeing without your direct involvement.
5) Help them to start their own YouTube channel: The number of mothers and grandmothers running their own YouTube channels right now is not funny! They know the best about parenting, baking, cooking, home remedies, life situations, societal norms, stories from the past, and what not. Give them a sense of achievement at their age, something they would look forward to – make them famous! And think up some good ideas about fathers too…
(Contributed by Priya Goel, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)