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Retail Investors In India Are Moving From Traditional Investment Portfolio To New Age Digital Assets

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A few decades ago, Indians preferred particular investment assets to grow their wealth or save tax. Investors largely relied on traditional routes of investments including fixed deposits, provident funds & insurance linked investment products. Others preferred tangible assets like gold or physical properties including land and residential properties. Most of these investment classes were preferred not only because of its risk free nature but for its liquidity as well.

Traditional Investment

However, as time progressed & economy moved towards development, people started looking for new avenues for higher returns & other investment objectives. The annual real income has grown particularly high for SEC A or B households typically HNIs or upper middle class segments.

National Income Growth in India

New Age Investment

With the demographic shift dominated by millennial & increased education, new age investment options comprising of both tangible as well as financial assets have emerged. Tangible assets include precious metals, antiques and even wines etc.; while financial assets include commodities, hedge funds, and distressed securities. Alternative investments have the potential to give much higher return on investment however, with associated risks & liquidity costs.

New Age Investment

Within the new age investment options, digitization & internet penetration has further given a boost to increased ownership of digital financial assets with innovative offerings that fit with the investment behaviour of niche segments. Asset allocation in fixed deposit, insurance and savings account has gradually declined over the years whereas investments in equity and mutual funds have seen a strong rise. The current investment trend is witnessing a shift to digital investments.

Digital Financial Assets

These are contemporary investment models that have not only found favour with new age investors but also with experienced investors. Some of the digital investment classes available for investors are:

Digital Gold Currency (DGC): It is a form of digital currency based on the mass units of gold. Each unit is linked to a gram or ounce of gold, and can be exchanged for gold on demand. There are several companies that issue DGCs the units of which holds the same value as that of gold bullion.

Crypto-currencies: A peer to peer technology of digital currency with no centralized governing authority which gained popularity through Bitcoin is now one of the most preferred investments for young individuals. It is an open source currency which can be transacted instantly. Several Indian crypto exchanges have sprung up from where investors can buy crypto-currencies. The space is however regulated and still nascent in India.

P2P Lending: Peer to peer lending or P2P lending is a digital lending marketplace that brings investors and loan applicants under an online marketplace. Investors can choose to fund loan applicant for high returns on their investments. P2P lending can also be used as a monthly source of income and unlike stocks that pay out dividends, P2P investors have the option of choosing their monthly returns. Investors can diversify their portfolio to adjust returns and risks, and can also exit through the secondary marketplace.

Digital Investment Class

The journey of investment has come a long way and investors have now moved on from traditional investments and started investing in multiple alternative classes.

Traditiona vs New age investments

The following table will help investors with an overview of various investment options

Investment options in India

Happy Successful Investing!

This article is authored by Nikhil Prabhakar, Head of Marketing & Products at RupeeCircle. He is an alumnus of IIM Ahmedabad & ESCP Paris and has 10+ years of work experience across multiple industries like Fintech, IT & Energy. He is an active investor across equity, derivatives, debt and real estate.

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