Managing NRI Investment Plans
Almost all NRIs wish to save enough to invest in their home country, but for various reasons cant do it well. Because investing in Kerala is not an easy decision nor process. So it is always better to invest as groups.
So how to do it?
NRI Associations can play a major role. Presently they are usually involved in lots of charity activities but they must focus more on the future and benefits of its members first. They should take the initiation to facilitate group investment programs. Because many things that a working person cannot do, can be done by an association or a group of people.
Traditionally, NRI groups opt for land investment. This is not a perfect strategy. Instead they should divide their group investment into 4 categories,
1. Fast Return Investments
2. Asset based Investments
3. Technology Startup Investment
4. Social Ventures Investments
Fast Return Investments are investments into presently running successful businesses. These are businesses that is presently in operation and doing well, but need funds for expansion, diversification, brand development, or mechanisation etc. Joining these businesses avoids the risk of startup failures, unproven business models etc. The investment group, should ensure they select the best company, and should ensure they are represented in the board, and that the business updates are on time. Select only those businesses that run professionally and have a good reputation.
Asset Based Investments are the businesses that are real estate based or have a significant part as investment into land or construction. And not just buying of land and selling. These businesses usually take 1 to 2 years to complete land buying, finalise architectural drawings and getting Govt permissions. Then another 3 to 5 years to complete construction. Then another 1 or 2 years to realise full rental capacity. That is by the time decent revenue comes it takes about 5 to 9 years! But unlike the Fast Return Investments, these have solid value and is safer though not very liquid. And once on-track the failure chances are low.
Technology Startup Investment is a high risk and high profit modern investment opportunity. It is about investing into startups that have a great potential. Few lakhs invested today can have a valuation of several crores in few years, sometimes even if the business is not making profit. The key is to find great ideas with great people. Its an investment we should not ignore.
Social Ventures Investments are businesses or ventures that if successful can reap extra ordinary results either as profits or social benefits, like agriculture, education etc. Why this investment? Because these investments helps the overall community to be more educated, healthy , safe or helps the economy in creating more quality jobs, security etc. This boosts the economy in general supporting our other investments to group. It's like charity, except that it's result oriented.
Investment groups should make portfolios to invest in all these. They should educate the investors into the art and ethics of investing. Investors should be taught not to expect high return on investment, but accept that having low investment return expectations like 5%p.a gives them a wide choice of investment opportunities, and over a period of time (by the time they retire) these businesses would have grown into a large tree of great value, high return and market value. Today no business tastes good to investors as they are expecting returns as high as 20-25% or more in first year itself.
Groups should focus on investing for future not to reap returns for today. This patience from investors is vital for them to win. Being greedy or oversmart, is not a smart move.
Business Insights from
Ameen Ahsan Strategy Consulting
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