Investment Opportunities for Indian HNIs

Investment Opportunities for Indian HNIs

 

High Networth Individuals (HNIs) can be defined based on networth, investible surplus or assets of the individual. Generally, in India, person having investible surplus or liquid assets of more than Rs.2 Crores are categorized as HNIs. Individuals with investible surplus ranging from Rs.25 lacs - Rs.2 Crores are considered as Emerging HNIs whereas individuals with investable surplus of more than Rs.25 crores are classified as Ultra HNIs. As per Economic Times report, in the last five years the HNI population in India has grown by 64.10% to reach 256,000 in 2018 from 156,000 in 2014 which are majorly based in Mumbai and Delhi.

HNIs are provided personalized services to manage their investment accounts as it becomes essential to understand their needs in terms of financial background, risk taking ability and willingness, market views and investment objectives.

The needs of HNIs can be broadly categorized on basis of following parameters:

1.     Wealth growth, preservation and Liquidity

2.     Safeguarding their wealth

3.     Optimal Returns

4.     Inheritance planning

5.     Tax planning

 

If you are falling in the definition of HNIs and wondering how and where to invest your wealth, you may consider below options:

Real Estate:

Real estate can be broadly divided into residential and commercial. Investment in residential would involve buying multiple homes either to be placed on rent or be used as holiday home or for use of younger generations. Commercial real estate, especially office spaces, warehouses, shopping centres etc. have emerged as most preferred investment for HNIs. Apart from this, smart cities are also an emerging opportunity for investors. Due to COVID-19, there has been a slash in real estate prices and liberalization in Government policies, making real estate a popular investment option considering stable income, collateral value and optimal returns. Real estate acts as a contributor as well as beneficiary of growth which makes real estate an important asset class in HNI portfolio.

Stocks, Mutual funds and Portfolio Management Services

Direct equity investment is dynamic form of investment which requires substantial research and analysis of potential stocks. HNIs would look for multi bagger opportunities and build their robust portfolio.  

Due to volatility of stock market, the portfolio can be exposed to lots of ups and downs. However, to minimize the impact of over exposure in direct equity and protect their portfolio from downside, one can invest in mutual funds and avail service of portfolio manager.

Fixed Income Assets

Government and corporate bonds play a crucial role in wealth management. The bonds offered by the government are risk-free and secured whereas the corporate bonds are bonds offered by large corporates are a little riskier to the extent of bankruptcy.

Investment in Startup

_­­­ Vide notification by the Central Board of Direct Taxes (CBDT) dated 24 May 2018, CBDT has given full freedom to angel investors on their equity investment in small startup above their fair value which was initially taxed at 30% on value of shares issued above their fair value in hands of investors. Therefore, this had been a hurdle for many startups to get adequate money to grow which was recently done away with. Hence, investing in startup has become easier and lucrative for HNIs.

Investment in Gold:

Gold is oldest and durable form of asset known to mankind. It is a natural hedge against various uncertainties. Gold in physical form i.e jewellery, gold coins, gold bars etc. whereas Gold in paper form shall include Gold exchange traded funds (ETFs) and sovereign gold bonds. Investing in paper form is a more cost effective way to invest in Gold.

Investment Overseas

Government allows a resident individual to remit upto 2,50,000 USD in each financial year without RBI approval under Liberalised Remittance Scheme (LRS). This allows HNIs to invest not only in purchase of stocks of foreign companies but also invest in real estate overseas. Also, there is an opportunity to borrow money and make investment in projects in those countries with reduction in cost of borrowing by central banks globally. The major factors that lure HNIs to invest overseas are attractive returns, flexible investment policy, tax advantage, safety of capital and a steady growth in their wealth.

Private Equity Investment

According to Economic Times report in 2019, 46% of Ultra HNIs were likely to increase their investment in Private equity and according to Attitudes survey conducted by Knight Frank in 2019, 31% of Ultra HNIs around the world were going to increase allocation to private equity. Private Equity investment involves directly investing in private companies in form of capital or engages in buyouts of such companies through private equity firms.

 

 Solutions to all HNI problems

It is difficult for HNIs to do research and analyze the best investment options to manage their wealth and achieve profitable returns with minimal risk. Even after investment, to manage their portfolios and track it on day to day basis to ensure that purpose of investment is achieved is a challenging task.

We have solutions to all these problems at Onestop NRI Advisory Private Limited with highly experienced and qualified professionals. We understand the needs and requirements of clients and accordingly suggest best investment options after substantial research and also considering current market trends. We are your ideal family office partner that focuses on sustainable investments which shall create significant positive change in your portfolio and support long term wealth generation. We shall provide investment strategies to mitigate risk, manage and grow your family wealth with goal based planning and help you achieve optimal returns on your investments. We, being your family office partner, also help you with business compliances, legal advisory services, ways to safeguarding your wealth in changing economic conditions and various strategies for wealth preservation. Sit back and relax as you have found one stop solution for all your problems and enjoy a hassle free experience with us.