What are the Investment Options available to HNIs?

As a high-net-worth individual, you create substantial wealth for yourself and your family. You would accept that wealth creation is a long-term process requiring tapping into the right opportunities at the right time. In this article, we’ll explore the best investment options you could go for as a high-worth individual (HNI). Without wasting any more time, let’s get started. 
 

Investment Options for HNIs 

Investment Plans of high net-worth individuals include the 

following. 
 

Market Linked Debentures 
 

Stock indices in India have been experiencing a boom for multiple financial years. The growth in indices has far exceeded expectations. Did you know that there exist investment options that allow you to earn index-linked returns? 
 

By investing in market-linked debentures, you gain exposure to a particular market segment without directly investing in its assets. This financial instrument does the trick by following benchmarks such as the gold index, equity index, or 10-year government bond yield. 
 

Issued by the Non-Banking Finance Companies, MLDs offer better tax benefits than other debt instruments. You should go in for this financial investment instrument only if you are ready to risk your principal repayment. 
 

Alternative Investment Funds 

As the name suggests, investments not included in the traditional category are considered alternative investments. Some examples of alternative investments include private equity investments, investments in art and antiquities, commodities, and hedge funds. 
 

The notable benefit of investing in these investment instruments is that their performance is often not directly correlated with the performance of other asset classes. 
 

AIFs are suitable for high-net-worth individuals, first because they require a sizable amount of investment, with a minimum investment of INR 1 crore, and second because they offer better opportunities for diversification and higher returns than traditional investment options.
 

AIFs are usually managed by qualified fund managers who focus on using different trading instruments, such as unlisted stocks, derivatives, and leveraged positions. A fund manager who understands your financial aspirations can provide the desired results. 
 

International Investments 
 

Previously, HNIs in India preferred to include international investments in their portfolios. This trend continues today as well. International investments offer geographical diversification and hedge against the rupee's depreciation against notable international currencies (particularly the U.S. dollar). 
 

Use feeder funds to place your international investments in stocks, bonds, and hybrid products. International investments are explicitly preferred by investors who aim to make a sizable financial base outside India. 
 

REITs & INvITs 

With lower amount requirements and better liquidity, net-worth individuals looking to get exposure to the real estate sector should consider financial instruments such as REITs and INvITs. REITs (Real Estate Investment Trusts) and INvITs (Infrastructure Investment Trusts) offer excellent opportunities to diversify your portfolio. 
 

Given the sizable nature of investment as an HNI, you can earn intermittent income flows by investing in these financial instruments. SEBI (Securities and Exchange Board of India) has mandated the distribution of 90% of the earnings of these funds to the unit holders.  
 

In summary, it is always advisable for high-net-worth individuals to consider alternatives to traditional investment options. Adopting alternative investments can lead to better returns and risk management. 
 

Parting Words 

Wealth creation is an ongoing process. Unlike a regular investor, a high-net-worth individual must explore alternative investing sources. Otherwise, there can be a risk of wealth erosion. In this article, we’ve seen the alternative investing approaches HNIs could use to maximise the returns on their investments and minimise their financial risks.