The investment panorama has undergone drastic changes over the last decade, especially during the post-pandemic period. The fusion of technology and money management has brought about exciting investment options that many investors may sometimes find difficult to understand and are also unaware of.
Here, we will look at hot and new-age investment options available to investors to beat inflation and grow their wealth. But before taking a view, let’s understand what inflation is and how inflation can hugely impact your returns.
Understanding Inflation
What is Inflation?
Let’s understand inflation with a simple example. Suppose you have INR 100 with you today, which is just enough to buy a plate of masala dosa that you wish to eat. If the inflation in one year rises to 10%, then the price of the same dosa will cost you INR 110. Thus the INR 100 that you have with you will lose its purchasing power to the extent of inflation.
In order to maintain the purchasing power of your cash, you need to invest in asset classes or investment options that are expected to grow in value at least at the rate of inflation every year.
New Age Investment Options
The investment plethora has changed and evolved over the years, and the investment options that are available for investors have undergone many modifications and inclusions.
Talking about the traditional low-risk investment options, as they are unable to generate real positive returns, they are easily replaced by the new age and innovative investment solutions that provide the right mix of risk and return.
For the long-term health of your portfolio, you should choose investment options that generate real positive returns so that you can achieve your future financial goals at your desired time. For example, suppose you invest in Fixed Deposits (assuming the current rate of interest on fixed deposits is between 5-6% and current inflation standing at 7%). In that case, you are generating negative real returns as the current level of inflation is higher than the return you are getting on fixed deposits.
Today, we have several new-age investment options that align with our financial goals and generate real positive inflation-beating returns. These are innovative, well-diversified, and provide the right mix of risk and return.
Need for New Age Investment Options
In today’s market, investors have various investment options to invest for the long term or even to park their money for short-term requirements. Whether you are a short-term investor or a long-term investor, whether your risk appetite is high or low, you have several options that suit your investment needs.
Now the question arises, why is there a need for new-age investment options, or why are investors shifting from traditional to new-age?
New-age investors have a higher risk appetite and higher proneness for investments.
India’s retail investor population is now moving from savings to building wealth with a goal and mindset to achieve their financial goals and improve their living standards. This change has resulted in the added demand for new-age investment options.
Additionally, modern investors are now aware of their risk appetite and prefer to invest in options that match their risk appetite.
But where are people investing?
The modern-age investor’s portfolio is spread across various asset classes. Mutual funds and equity remain common across all investor groups. Investors have also started moving towards passive investments and alternative investment avenues like Gold ETFs, real estate, cryptocurrencies, unlisted equities, and many more.
Actively managed products like mutual funds remain common among investors, and Bank fixed deposits are still considered the safest investment option among investors.
What should be the return expectations of investors?
“Practical expectations lead to practical plans and eventually to achievable goals.”
The amount of return generated by the different investment options is also different. But to create long-term wealth and make the magic of compounding work for you, investors should invest in such avenues which at least beat inflation and generate real positive returns.
Bottom Line
All the new-age investment options look enticing and promising but come with their own risk and reward ratio. Every investor has a different risk appetite and financial goals. Therefore, all investors must analyze and understand before investing. Moreover, if you do not possess the required expertise or experience, you must consult a financial expert who can help you assess your risk profile and give a plan that enables you to achieve your goals.
Disclaimer: The views expressed in the blog are purely based on our research and personal opinion. Although we do not condone misinformation, we do not intend to be regarded as a source of advice or guarantee. Kindly consult an expert before making any decision based on the insights we have provided.
