The changing investment preferences of HNIs

The changing investment preferences of HNIs With the changing scenario, the investment preferences are also changing. But why? Well, all thanks to the pandemic outbreak which led everyone to wonder about the stability of the financial world and stock market. While the stock market is in, the stability of the market is not so reliable. The only option left with the investors in real estate investment. However, due to high commercial property prices, this type of investment is usually considered the best for HNI Investors. But that is not the case in the present scenario. Now real estate properties are not limited to one sector of the investors. Do you want to know how? Well, keep on reading this article. But first thing first, let us know what HNI Investors actually are.

What are HNI Investors?

High-Income Individuals (HNI) are broadly defined as people with an investment surplus of Rs 5 crore or more. In 2027 the amount of HANI investors will be nearly from 3 million HNI to 9.5 million HNI. HNI accounts for 58% of India’s GDP and only about 30% comes from Mumbai and Delhi. HNI has traditionally relied on a combination of capital expenditures and liabilities to grow its assets. But that seems to have changed over the years. There is currently a growing movement towards alternative asset classes.

Changing Investment Scenario The investment sector is changing rapidly, this can also pertain to the aftermath of pandemic COVID 19. The following are some changes that the investment world is witnessing

Commercial real estate is one of the asset classes that has seen significant growth in HNI cash allocation. While individual investors choose to diversify their portfolios to maintain their wealth, HNI tends to focus on concentrated equity holdings. There has also been a significant increase in the reclassification of financial assets to tangible assets within the HNI fraternity.

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In accordance with this figure, real estate is HNI’s third-largest asset class following equity and debt. This figure is supposed to increase further in the future. According to a 2019 survey, stocks were considered the most preferred asset class for a portfolio with a payout of 29%, while bonds bought were 21% and 20% in real estate investments.

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The pandemic has forced HNI / UHNI to take a closer look at their portfolios and adjust their portfolios for any future risk. Overall, we have seen some serious efforts to reshape the portfolio. As 20-40% of assets were converted from equity to debt, capital safety was an important factor, followed by a 20-30% increase in exposure to quality stocks.

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The downturn in the stock market has made good-quality stocks available at attractive prices. Alternatively, investors should keep their money in their portfolios while they look for suitable opportunities. As quoted by Warren Buffett, “Cash to has real value, as with many other aspects of investing. Cash is not just an asset class that is returning next to nothing. It is a call option that can be priced.”

Therefore, when comparing this option with the ability to buy an asset for cash, it is advisable to invest part of the portfolio in cash or cash equivalents.

What Should HNIs Consider?

For achieving long term income benefits and to get the maximum advantage of investing, the HNI/UHNI investors should certainly consider the following points-

Don’t be Fastidious Whenever it comes to investing you should always look into the details very carefully. However, sometimes too much caring may lead to overlooking the important details of the project and you may end up falling prey to a scam or not getting enough benefits. This is why you shouldn’t make any decision hastily or without thinking of the pros and cons.

Don’t be Emotional A comprehensive and disciplined approach to your portfolio may seem easy to understand. But in practice, it becomes very difficult. The HNI often fluctuates between sitting on a fence and being hyperactive when the actual fear is activated. Successful investing requires HNI to calmly focus on asset allocation and avoid the bad habit of being an emotional follower.

Don’t Oscillate Much More money means more options. The more options, the more confusion there is. This will eventually move you away from conventional options like stocks, mutual funds, deposits, and bonds towards more complicated options like equity, art, funds, and real estate structures. You should always follow your advisor’s guidance and only invest if you need to add more sophisticated products to your portfolio. You shouldn’t always just invest by considering the fact that the product is unique.

So now that we have accustomed ourselves to the terms HNIs/UHNIs, we can safely invest in commercial properties without failing. By following the above- mentioned advice, one can now invest safely seeking huge benefits of commercial real estate investment.

About the Author: Yield Asset Yield Assets is one of the best commercial property investment companies that provides the best real estate investment platform. Investing in pre-leased commercial property is one of the best investments that one can rely upon.