This is Part 2 of our series on what are alternative market investment options to stocks, mutual funds, SIPs, and IPOs. In Part 1, we learned about government-backed and gold-based investments. Now, in this 2nd part, we will explore higher-yield market investments that offer better returns, and broader market exposure.
These market investment options are perfect for investors who want to expand beyond traditional investing and explore new options within the financial markets.
What are Alternative Market Investment Options?
This Part 2 of the series explores bonds, ETFs, REITs and more market investments, perfect for investors who want alternatives to traditional investing.
1. Corporate Bonds (AAA to A Rated)
Corporate bonds are debt instruments issued by companies to raise funds.
Why invest in Corporate Bonds?
- Higher interest than G-Secs
- Predictable returns
- Regular interest payouts
- Tradable anytime
AAA-rated bonds are safest, while A-rated bonds offer higher yields.
2. Bond ETFs & Bharat Bond ETF
Bond ETFs provide market-linked returns by investing in pre-selected bond baskets.
Bharat Bond ETF invests in public sector company bonds (PSUs), making it safer than typical corporate bonds.
Advantages of Bond ETFs & Bharat Bond ETF
- Low expense ratio
- Highly liquid
- Transparent portfolio
- Easier than buying individual bonds
Target maturity bond ETFs have become popular due to fixed maturity and predictable performance.
3. REITs (Real Estate Investment Trusts)
REITs, Real Estate Investment Trusts, let small investors earn from big commercial properties without actually buying them.
Why are REITs trending?
- Low minimum investment (as low as ₹500)
- Regular dividends
- Access to high-value properties
- High occupancy rates
Investors can benefit from office buildings, malls, IT parks, and more without owning any property themselves.
4. InvITs (Infrastructure Investment Trusts)
InvITs, Infrastructure Investment Trusts, allow you to invest in infrastructure assets like highways, toll roads, power grids, and renewable energy plants without owning them directly.
Why choose InvITs?
- Stable cash flows
- Regular dividends
- Long-term demand (infrastructure always growing)
- Low volatility
InvITs are excellent for investors wanting regular income.
5. ETFs (Exchange-Traded Funds)
ETFs are investment options that help you trade in a whole sector like Nifty 50, gold, or a sector. When you buy one ETF, it’s like buying all the stocks or the whole sector in that group. They are much cheaper than mutual funds and easy to buy and sell, just like shares.
Popular ETFs to invest in
- Nifty 50 ETF
- Sensex ETF
- Banking ETF
- Gold ETF
- G-Sec ETF
- Sector ETFs (IT, Pharma, FMCG)
ETFs are great for investors who want to invest quietly in the background and pay very low fees.
6. Sectoral & Thematic ETFs
Sectoral & Thematic ETFs focus on specific sectors like energy, pharma, IT, PSU banks, or defense.
Why Sectoral & Thematic ETFs are useful?
- Access to high-growth sectors
- Less risk than picking individual stocks
- Easy diversification
However, they are higher-risk than broad market ETFs.
7. Commodity Trading (Silver, Crude Oil, Copper)
Commodities behave differently from equities and bonds.
What can you trade?
- Silver
- Crude oil
- Copper
- Natural gas
- Zinc
Commodity investments help hedge against inflation, global crises, and currency fluctuations.
8. Silver ETFs and Commodity ETFs
Silver ETFs have become very popular in India, giving investors exposure to silver without needing physical bars.
Why silver ETFs?
- Transparent pricing
- Lower minimum investment
- No storage issues
Commodity ETFs simplify your exposure to commodities without entering futures trading.
9. Crypto Assets (High-Risk Digital Market)
Cryptocurrencies are global digital assets with high volatility.
Before investing in Crypto Assets, note
- Highly unpredictable
- Requires market understanding
- Should be less than 5% of your portfolio
Crypto provides diversification but is not for beginners.
10. Peer-to-Peer Lending (P2P Lending)
P2P lending is an RBI-regulated online lending model where investors lend money to verified borrowers.
Why P2P lending?
- Higher returns (10–14%)
- Monthly interest
- Market-demand based
However, it carries default risk and should be diversified across many borrowers.
Conclusion (Part 2)
This second part completes our two-part guide on market-based investment alternatives. While Part 1 focused on safe and government-backed investments, Part 2 introduced higher-return and diversification-friendly market instruments like bonds, REITs, commodities, and digital assets.
Together, both parts help you build a portfolio that is:
- Diversified
- Market-oriented
- Balanced
- Suitable for short, medium, and long-term goals
If you haven’t read Alternative Market Investments Beyond Stocks and Mutual Funds (Part 1: Government & Gold Investments), make sure to check it to know more options.
10 Questions About Alternative Market Investments People Ask
1. Do corporate bonds have guaranteed returns?
They offer fixed interest but depend on company creditworthiness.
2. Are REIT dividends taxable?
Yes, most REIT income is taxable based on the type of payout.
3. Can I invest small amounts in InvITs?
Yes, they have low entry points similar to REITs.
4. Are sector ETFs risky?
Yes, because they depend on the performance of one sector.
5. Are commodity ETFs safer than MCX trading?
Yes, since ETFs don’t involve leveraged futures.
6. Does crypto affect long-term portfolios?
Yes, it increases volatility but provides diversification.
7. Is P2P lending legal in India?
Yes, regulated by RBI.
8. Can REIT prices fall?
Yes, they are market-linked and depend on occupancy, interest rates, etc.
9. Are silver ETFs better than physical silver?
Yes, due to transparency and no storage issues.
10. Do bond ETFs mature like normal bonds?
Only target maturity bond ETFs do.
Disclaimer
This article is for informational purposes only. It should not be treated as professional advice. Please verify independently before making any decision.
