New Age Digital Investment Platforms Offer 9-11% Fixed Returns: Should You Invest?
When it comes to investments, there is no one-size-fits-all option. Depending on an individual’s financial goals and performance expectations, the right investment option should be chosen. To fill the void and respond to these people, various fintech companies and digital investment platforms have come up with different options so that one can make the choice that is best for them.
Digital investment platforms such as Wint Wealth, Scripbox, Wealthy, Clearfunds, Groww, Goalwise, Paytm Money, Zerodha Coin, etc. help investors invest in mutual funds as well as stocks, help manage the portfolio periodically based on taxes and exit charges, provide a goal investment approach, balance your equity portfolio and help move from one fund to another, among others.
Ajinkya Kulkarni, co-founder of Wint Wealth, says: “These fintech platforms strive to bridge the gap between fixed deposits and debt funds, stocks and mutual funds.
In an exclusive interview with Priyadarshini Maji, It explains how these digital investment platforms provide retail investors with fixed income products backed by high net worth assets, allowing them to generate higher returns than term deposits.
How do digital investment platforms work?
Most of these platforms provide a full set of tools to help make, manage and track investments. Wint Wealth, for example, provides access to other financial assets that were available to HNIs and UHNIs by reducing the minimum ticket size and leveraging technology to spread awareness and education on these assets. In today’s environment, it is a platform that provides a covered bond structure by working with NBFCs.
In addition, full asset information is mentioned on the website for studying. Full transparency helps investors make an informed decision. If they still have questions, then they can contact the education team for further clarification. Once they feel confident and want to invest, they can proceed to payment after completing their KYC, the units of which will be reflected in their Demat account within two business days.
How do these digital investment platforms fill the market void, especially for retail investors?
They offer diversification opportunities to individual investors by giving them access to investment products. Wint Wealth comes with the option of investing as low as Rs 10,000 and raising awareness of these less explored investment products. Covered bond structure, for example, a less explored product is available on the platform, falls under the high risk category with risk mitigation measures in place.
What makes these digital investment platforms an ideal option for new age retail investors looking for other investment options?
The high volatility induced by the pandemic in the market has forced retail investors to diversify into alternative investment options. New age retail investors will find these platforms to be a true innovator as they offer products that generate high returns with high risks with risk mitigation measures in place by offering fixed returns of 9-11%.
Another factor that makes it a bankable investment avenue is that it offers instruments like covered bonds which, in the long run, prevent events like the 2008 crisis. New-age or not, the investor who understands all the risks associated with these assets should only consider them for his portfolio, if you think it is not yet for you, wait until you are convinced otherwise.
What is the Wint Wheel Bankruptcy Protected Bond?
The covered bond structure is a remote, dual-recourse bankruptcy instrument. Simply put, here an NBFC goes into debt with the Wint Wealth platform and, in exchange, issues bond units. At the same time, a third entity was created, called SPV, which will hold vehicle loans given as collateral by the NBFC and represents 1.2 times the value of the capital raised by the latter.
Thus, in the event that the NBFC goes bankrupt, the trustee managing the SPV will use the SPV loan pool to collect money from retail investors. So there are two resources, the first is on NBFC and the second is on the loan pool.
What are the risks involved – what criteria should investors keep in mind when investing in Wint products?
Each instrument has its own set of risks, which is why our priority is to establish transparent communication with investors by all means. Our aim has never been to “sell” these products, but rather to provide comprehensive information and the associated risks, thus enabling investors to make an informed investment decision.
Given the current high volatility in the market, is it the right time for retail investors to enter this segment?
When it comes to portfolio diversification, asset allocation is the first decision to be made. For example, one should not allocate north 30 percent of its portfolio in the assets of Wint Wealth. One should limit it to 10-15 percent of their overall portfolio, starting with just 2-3 percent, and gradually increase with increasing confidence and comfort. Every investment should be made after understanding the product and assessing their finances, based on their risk appetite.