Investment Options Better Than Fixed Deposits

Summary: Fixed deposits are the favourite  form of savings for the majority of Indians. However, with the advent of alternative investment options, you now have a wider spectrum to choose from. Most of these alternative investments offer higher returns than fixed deposits and are much less risky than equity investments. We bring you a list of exciting investment opportunities that can strengthen your portfolio and help your money compound regardless of market fluctuation. Read the blog to know about the top alternative investments and other forms of investments that are better than fixed deposits.  

The conservative Indian mind passes on its trust in fixed deposits like an heirloom through generations. Though considered safe, Grip will help you understand why it is not the most conducive time to invest in fixed deposits.

Both nationalised banks and private banks offer FDs with interest rates ranging as low as 4.4%-5.8% per annum subject to tenure. Senior citizens get an interest rate between 5.0%- 7.00%.

Inflation and interest rates are inversely proportional. When the interest rate is less, people borrow more and save less. RBI increases bank rates to reduce the supply of money in the economy. The Central bank checks commercial banks' capacity to create credit lending thus reducing the money supply. Saving becomes less attractive as interest rates fall, which is exactly the situation now.

However, fixed deposit is a popular mode of investment that still resonates with the older population. But if you have just started your investment journey, why restrict your investment portfolio when you can reap healthy returns through multiple and alternative investments? So, we suggest some attractive and alternative low-ticket investment options which are better than fixed deposits and will help you to get steady returns through different non-market linked investment sources even if one of your investments is not performing well.

Multiple And Alternative Investment Portfolio List Better Than Fixed Deposits. 

Public Provident Fund 

PPF (Public Provident Fund) is considered one of the safest income investments that come with a government guarantee. This account can be opened in banks or post offices on a maximum tenure of 15 years. It has the option of a 5 years extension for long period safe returns. The PPF interest rates are revised by the government quarterly with current rates at 7.1% for Q3 (October-December) FY 2022-23 which is a better investment than fixed deposit in terms of interest rate. The minimum investment is ? 500, and the maximum investment per annum is  ?  1,50,000. Period 15 years (permissible extension of 5 years ) Rate of Interest: for Q3 (October-December) FY 2022-23 is 7.1%

Corporate bond investments: 

Corporate bonds can be considered better investments than fixed deposits. We will tell you why.

The return rate is higher than FDs. A corporate bond is issued by a listed company to raise capital. As an investor, you would be lending money to the company against a pre-established number of interest payments at fixed or variable rates. Once the bond reaches its maturity the original investment is returned with interest. Corporate bonds are non-market-linked investments. 

Corporate bonds, however, are not directly available and are issued via private placements. They can be obtained from the National Stock Exchange, The Bombay Stock Exchange or a broker. You can also find corporate bonds at https://www.gripinvest.in/.

These transactions usually have high ticket sizes and therefore can be accessed by high-net-worth individuals. Grip allows investment at low ticket sizes starting from ? 10,000.

Though not market linked they have their share of risks ensuring steady income flow. Look out for bonds with safety ratings that range from AAA or Aaa to BBB or Baa. Bonds that are not rated are junk bonds and are risky though projecting high yield.

Government Bonds 

They are investment options used by the government to raise capital for their projects and are also called government securities. They have varied maturity periods and the interest rates called coupons are subject to bond periods. The bonds come as Fixed Rate Bonds and Floating Rate Bonds; fixed-rate coupons disbursed on a semi-annual basis are more popular. The current coupon rate is 7.5% and remains the same despite market fluctuation. Floating rate bonds have interest rates reset after every six months throughout the tenure. The maturity period of the bond is from 91 days to 40 years with a minimum investment of ?10,000. A maximum of ? 2 crores of investment can be made. The interest rate varies as per maturity.

Asset Leasing

This is a new investment option that is non-market reflective. It is a contractual agreement between the lessee (user) & lessor (owner), for regular payments to use an asset for a specified period. The lessee & lessor can be anyone such as an individual or a company. Leased assets can include many things from furniture to vehicles. Companies use the leased asset and scale it faster, returning investors to non-market linked monthly payments. Leasing contracts can happen between individuals to individuals, companies to companies or between individuals and companies. Companies requiring assets for business operations choose to lease for staying asset-light and converting CAPEX to OPEX. Leasing is an alternative investment option for retail investors to co-invest and generate passive income at better time value from leased assets of a company. This is considered a better investment than a fixed deposit as investing through Grip will help investors to lease contracts at a low ticket size of ?10,000. Grip manages the end-to-end journey looking after leasing and returns.

Savings Account of Equites and AU Small Finance Banks

This investment option is a zero-balance account targeting tech-savvy individuals. Interest rates are high on fixed deposits between 3.50% to 7.25% depending on the investment period of 7 days to 10 years for general investors with quarterly and monthly pay-outs. The investor is allowed only online transactions, net banking, and virtual VISA debit cards and Rupay. You don't need a savings account to open a Selfe Fixed Deposit account. The interest rate is up to 6.10% p.a. for 1 year. You can deposit a minimum of ? 5,000 and a maximum- of ? 90,000 for 7 days to 1 year. A monthly interest pay-out option is available with discounted compounding basis quarterly interest rate.

Inventory Financing 

This is another alternative non-market linked investment option that can be considered over the fixed deposit. Companies that deal with raw materials and finished goods are supplied with adequate inventory to ensure that the supply chain remains consistent with demand. Through inventory financing companies can raise capital against inventories that otherwise get blocked on inventory investment. Investors investing in inventories receive fixed income from the pre-approved schedule of sale. Companies stay asset-light while scaling profits and investors get healthy returns on investment. If you invest through Grip you can invest at a low-ticket rate of ? 10,000 upwards and earn up to 12% pre-tax yield.

Startup Equity Investing

Early-stage start-ups must be backed by VC or angel investors with deep pockets. But what if you can be a retail investor and co-fund a start-up enjoying high returns when the start-up succeeds? Investing from the Grip platform, the element of risk is relatively reduced. Grip only opens investment opportunities for accredited investors (AI) following SEBI guidelines. The criteria that needs to be met are, the annual income of the individual should be over  ? 2 crores or a net worth of ? 7.5 crores of which ?3.5 crores is in financial assets or annual income of ?1 lakh; net worth of or more than ? 5 crores of which financial asset is worth ? 2.5 crores. An investment of another ?25 lakh needs to be made over the next five years. Grip conducts due diligence on all companies in their portfolio and therefore the risks are more calculated than on other platforms. You can invest a minimum of ? 2 lakh on this platform. This alternative investment is market reflective. 

Commercial Property Investing 

Commercial Property Investing (CPI) at one time was a UHNI and HNI-dominated high-ticket investment. But fractional ownership business models have democratised investment at a lower ticket. CPI provides high returns from rentals in high-demand commercial spaces and the demand is constantly rising even in tier II cities. It is a stable source of high income; commitments are generally on a long-term basis. Appreciation over a period is higher. If you are investing through Grip, you can invest with a minimum of ?1,00,000. All commercial properties under the Grip platform qualify for diligence and merit based on investor-conducive features.

Conclusion Summary

With so many alternatives and other attractive investment options making the playing field attractive, how can an investor choose the correct options to start their investment journey? The first thing to understand when you are choosing an investment option over a saving option that is better than a fixed deposit, you must know what you are investing in. When investing, look for the underlying value of your investment. Start participating in multiple investments and strengthen your investment portfolio. And most importantly, do not invest without understanding. Read carefully and unless you fully understand the product, don't step into it. https://www.gripinvest.in/ has elaborate literature guiding and educating investors on how alternative investments can be used to their advantage. While you educate yourself and become investment ready, remember many alternative investments work on low-ticket investments that help you learn as you grow into a pro-investor. So, you can invest and learn and see how your money starts compounding and buying a day that you don’t have to work as Investment Advocate Aya Laraya puts it. So, start early and make money!