TomorrowMakers

Tired of traditional investments? Here are some unconventional options you can consider.

Traditional investors have often toyed with the idea of investing in alternative options; ones that have potential to bring in high returns, even if they are not necessarily as stable as regular investments. No longer frowned upon, some of these unconventional investments can generate returns that may sometimes be much more than what stocks and bonds have to offer. So, what are these alternative investments?

Digital Gold

 

An alternative to physical gold, digital gold currency (DGC) is a type of electronic money based on mass units of gold that can be used as a kind of representative money. So, what makes this a good investment option?

  • Digital gold is low on maintenance cost and storage.
  • Unlike physical gold, it is electronically secured and can be exchanged for money on demand, when needed.
  • Several Indian companies issue DGCs, such as PayTM in a tie-up with MMTC-PAMP. Motilal Oswal also has a digital gold investment scheme that allows you to invest in gold with as little as Rs. 500.

Related: How can gold be a good investment for a working woman?

Artefacts

Investing in art is not easy, but it can be financially rewarding in the long run. For instance, if an M. F. Husain piece of art was purchased for Rs. 1 lakh in the 1990s, presently, the same work could very well be priced upwards of Rs. 50 lakhs. Similarly, other Indian artists such as Raza and Anjolie Ela Menon too have reaped rich rewards, making art a smart alternative asset. Although collecting artefacts can be as temperamental as the stock market and may not be as easily cashed in, it is viewed as a long-term investment. However, bear in mind that artworks can be difficult and expensive to maintain.

In India, paintings make up about 99% of the art market. So, where can you begin dabbling in this investment if you want to? You can start by visiting galleries, scanning magazines and slowly becoming more acquainted works by different artists that are being auctioned (at Christie’s, Sotheby’s, Bid & Hammer, Pundoles, Saffronart).

Related: Open ended funds vs close ended funds

Diamonds

Diamonds are said to be a girl’s best friend and certainly make a very good investment. But for most people, buying diamonds (let alone investing in them) can be quite an expensive affair. That could probably change with Diamond SIP – a unique innovation being offered by Indian Commodity Exchange Limited (ICEX) - a screen based online derivatives exchange for commodities. What does it offer?

  • Invest less than a thousand rupees a month, for less than three years and you can buy diamonds through the SIP route.
  • You need a Demat account to invest in diamond SIPs
  • Like digital gold, diamonds are traded in electronic form. However, to convert it into physical form, you must accumulate a specific amount (30 cents).

ICEX also claims that the diamonds you invest in are certified by global major De Beers for authenticity, grade, cut, brilliance etc.

Related: ETFs: 6 Reasons they make an excellent instrument for investors

Alternative Investment Funds

According to SEBI, 'Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors'.

  • AIFs in India are private funds which do not fall under the jurisdiction of any regulatory body in India.
  • There is rising appreciation among successful investors to invest their money in distinct unlisted firms and highly profitable realty via venture capital funds or private equity.
  • Affluent investors are increasingly injecting their funds into alternative investment funds (AIFs) instead of investing in conventional stocks and bonds and with good reason.

The growing need to invest in asset classes, other than the stock exchange, has been fuelled by the volatility of stocks and the need for better returns.

Related: A guide to systematic withdrawal plans

Conclusion

From digital gold to artefacts, diamonds and AIFs, alternative investments can be a fascinating option for the discerning investor, especially for those with distinct know-how in a particular domain. Exploring new avenues to invest that don't involve the stock market has never been more exciting. Sooner or later stocks may fall, and investors will clamber for dependable alternatives, but due to the complex natures and limited regulations of these investments, it is important to have a healthy mix of various alternatives.