Traditionally, many Indians look at Diwali as a favourable time for gold investments as it is considered highly auspicious to buy gold on Dhanteras in many households.
Due to the sentimental value it holds, Indians invest in gold via the purchase of yellow metal or coins or jewellery on Dhanteras.
People have bought gold over the decades for their future generations as it’s known to be a safe option.
However, today, investors have multiple assets to invest in, and several options can be explored for investment during Diwali for wealth creation and diversification.
People are also showing more willingness to move beyond gold during Diwali investments. According to a recent study, 80% of young investors are turning to investments that fall outside of traditional asset classes.
When it comes to high returns and creating wealth, an asset that tops every list is equity. Investors looking to stay invested for a long time can either invest a lump sum amount this Diwali (if they find stocks at reasonable valuations) or start SIP in some quality stocks (SIP is always a better route).
People new to investing and planning to start equity investments this Diwali should consult an advisor before investing. Alternatively, they can use a technology-driven platform that makes equity investments easier.
Today there are several AI investment advisory platforms that are easily accessible to retail investors and simple to use with the objective of catering to a larger audience base. These platforms also help greatly generate a good portfolio based on one’s risk appetite and generate returns per one’s financial goals.
Another route to invest in equities is via mutual funds, index funds and ETFs. This way of portfolio diversification is crucial as it helps in a better risk-return ratio. Equity investment is risky, but investors should not avoid the investment option rather, focus on ways to minimize risk.
One of the easiest ways to reduce the risk is by diversifying the equity portfolio. This can be achieved by investing in companies from different sectors and across market-cap. According to research conducted by BHB, more than 90% of volatility in a portfolio can be addressed by careful asset allocation and diversification.
Long-term investors can also explore the option of investing in international funds. In the current global macroeconomic scenario, a lot of these international funds are available at a discount.
Most investors in India are unaware of angel investing. Earlier, angel investing was beyond the reach of most, but today, becoming an angel investor has become easy.
One can consider this option during Diwali after understanding the risks involved. It is a high-risk and high-return investment option. Investing a small percentage of the total portfolio (3 to 5%) in different start-ups as angel investors and not everything in one or two start-ups can be a wise path, to begin with. If one of the start-ups scales up, the investment could multiply 100 times or more.
If you have the network and the knowledge to evaluate startups, you can invest directly in them as an angel investor. If not, some platforms in India make investing in startups easy - you can explore that option.
These are really long-term investments (and may have a lock-in), so don't expect returns anytime soon. When you invest in gold on Diwali - you don't plan to sell it in the near future. Similarly, when you invest in startups as an angel investor, plan to hold them for a long time.
The festival of Diwali is also about bringing change. This year, bring a change to your investing mindset - think beyond gold this Diwali.
(The author of this article is CEO and founder of JARVIS Invest)
Disclaimer: The views and recommendations given in this article are those of the author. These do not represent the views of MintGenie.