Top Alternative Investments to Grow Wealth in India

Top Alternative Investments to Grow Wealth in India

For a long time, Indians have focused on traditional investments like fixed deposits, mutual funds, and real estate. Even though these still provide the necessary stability, a greater number of investors are trying alternative investments in India to diversify and accelerate wealth growth.

This blog covers top alternative investments, their importance, and the best alternative investments to consider like AIFs in India, REITs, InvITs, P2P lending, and hedge funds to help build long-term financial freedom.

 

What Are Alternative Investments?

Investments or assets other than traditional categories like stocks, debt, or cash are known as alternative investments. This involves REITs, InvITs etc. The stock market and alternative investments are not directly correlated. This alternative investment strategy will particularly help investors who have cash flow limitations. 

 This lack of correlation places these investments in the ideal position for risk management and diversification. For HNIs, family offices, and even retail investors, alternative investments India have become a viable solution to building long-term sustainable wealth.

 

 

Why Consider Alternative Investments?

 Before valuing the options, let’s understand the reasons for considering alternative assets:

1. Portfolio Diversification – By investing in alternative assets, the investor will be able to offset the volatility and reduce the movement of the overall passively managed portfolio.

2. Higher Returns – Alternative assets like private equity and hedge funds usually help the investor achieve double-digit ROI.

3. Inflation – Protecting real inflationary spikes in commodities, infrastructure, and real estate.

4. Emerging Industries – Investments in Trusts and AIFs will help the investor gain exposure to industries like digital infrastructure, renewable energy, and logistics.

5. Cash Flow – Instruments like P2P lending and REITs provide regular cash flow and the ability to capitalise the investment while your principal remains the same.

 

Real Estate Investment Trusts (REITs) India

 With the help of REITs India, you don’t have to buy a physical property. You can invest in income-generating real estate. These real estate investment trusts manage and take care of commercial real estate. Instead of owning the real estate, you can manage a portfolio of real estate by distributing shares in the funds.

 

Minimum Investment – Rs. 10,000 – Rs. 15,000 (as per latest SEBI norms).

Average returns – Rentals and capital appreciation yield an average of 7–12%.

Liquidity – Managed like shares of the company. Buy and sell as you would in the stock market. Tax Treatment: Investors enjoy tax-free dividend income (as long as the REIT distributes post-tax income).

Some of the popular listed REITs in India are Embassy REIT, Mindspace Business Parks REIT, and Brookfield India REIT.

For investors looking for wealth-building investments accompanied by regular passive income, REITs are perfect for beginners in the real estate market.

 

2. Infrastructure Investment Trusts (InvITs) India

With the exception of their emphasis on revenue-generating infrastructure assets, including electricity transmission lines, toll highways, and renewable energy assets, InvITs India are identical to REITs.

 

Minimum Investment: About Rs. 10,000 – Rs. 15,000.

Returns: 8–13% annual returns on investments mainly through tolls or utility revenues.

Liquidity: Listed InvITs such as IRB InvIT and PowerGrid InvIT can be traded on the NSE and BSE.

To grow wealth investments, InvITs are suitable since they provide stability and inflation protection due to their backing by government-controlled infrastructure assets. 

 

3. Alternative Investment Funds (AIFs) in India

AIFs in India are pooled investment vehicles that accept investor funds for use in investment strategies.

 

Category I AIFs:

Invest in startups, early-stage ventures or infrastructure, thereby growing the economy. For example, Venture Capital Funds.

Category II AIFs:

Includes private equity funds, debt funds, or special situation funds and involves the highest number of HNIs pursuing aggressive target returns.

Category III AIFs:

Includes hedge funds and other strategies that use derivatives and leverage to generate other returns.

Minimum Investment: Rs. 1 crore (Rs. 50 lac for employees/directors).

Returns: 12-25%+ depending on the type of fund and risk profile

Lock-in: 3-7 years.

AIFs are ideal for risk-agnostic investors focused on the long-term for WIN, with the potential to earn high returns, albeit with risk.

 

4. P2P Lending India

In India, peer-to-peer (P2P) lending contributes to the financing of both company and personal loans. The platforms link the funds covered by the loans with borrowers and private investors who earn interest on P2P loans (similar to personal loans) and fund business loans.

Minimum Investment: Rs. 5,000 to Rs. 10,000 per borrower (depending on the P2P lending platform).

Expected Returns: 10–18% annually, depending on risk level. 

Platforms: Faircent, LenDenClub, and Liquiloans are SEBI-registered NBFCP2P platforms.

P2P lending involves higher credit risk. However, risk can be managed by spreading the loan across different borrowers. It is one of the most accessible alternative investments India for retail investors.

 

5. Hedge Funds India 

Complex investment methods, including arbitrage, derivatives, and holding both long and short positions in the same firm are used by professionally managed pooled funds, also known as hedge funds India, to make money.

Minimum Investment: Rs. 1 crore.

Expected Returns: 15–30% depending on strategy and market conditions.

Risk Level: High – due to complex strategies and leverage. 

Hedge funds are classified as Category III AIFs but are predominantly used by ultra high net worth individuals (UHNIs) as they have high minimum investments. Hedge funds introduced to alternative investments India are professionally managed to mitigate the high risk associated with them. 

 

6. Private Equity & Venture Capital   

Private equity and venture capital are long-term wealth-building investments that back private companies not listed on the stock market. Investments in this may take time to pay off, but the potential payoffs can be significant. Imagine being an early investor in Flipkart, Zomato, or Nykaa! AIFs in India serve as the entry point for most people for these investments.

 

7. Commodities & Precious Metals  

Investing in gold, silver, and other precious metals and commodities is something a lot of people do in India. This is something that can be done if people want to grow wealth. Commodities also help in the preservation of wealth from inflation and currency fluctuations.

Investment Options: Gold ETFs, silver ETFs, gold sovereign bonds, and other futures contracts.

Returns: Gold has annual returns of 8-10%, on average, over the long term.

Commodities help in maintaining a balanced portfolio for wealth preservation, especially for conservative investors.

 

Risks of Alternative Investments

An investor has to recognise various risks when the weights are more on the potential rewards:

• A number of alternative investments come with an extended period before you can access your money.

• Some options offer little in the way of returns for a large investment ( Rs. 50 lac to Rs. 1 crore ).

• To manage the risks outlined above, a well-researched plan and appropriate diversification are necessary. 

 

You should also concentrate on optimizing your tax savings in addition to diversifying into other options. Read our in-depth article on Tax-Saving Investments Under Section 80C to learn how to make the most of your Section 80C deductions and include them to your wealth-building plan.

 

 

Final Thoughts

Even ordinary investors can also take advantage of complex wealth-building opportunities through SEBI-regulated products such as REITs India, InvITs India, and P2P lending India. Combining traditional assets with the best alternative investments can result in a well-balanced, growth-oriented portfolio, regardless of your level of experience.

Alternative investments India will continue to be essential in assisting people and companies grow wealth more strategically as India's economy grows and regulatory frameworks develop. In the modern financial era, diversity is not only prudent, but crucial, so investigate, study, and start your journey toward wiser wealth-building investments right now.

 

DISCLAIMER: This blog is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.