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“Varad, I want to explore something new in my investments.” That’s not an unusual request for us.
Clients often reach out with the intention of exploring “something new.” Sometimes it’s after receiving a large bonus, selling a property, or inheriting money. Sometimes, it’s simply because they’ve been investing in the same avenues for years and want to know what else is available.
We heard one such request about two years ago.
A client walked into our office with ₹1.25 crore in his bank account and the desire to add something new to his investment basket. He had recently sold one of his flats in Mumbai and was left with this amount after clearing the outstanding loan.
Over the years, we’ve had several investors approach us with large sums of money and a similar desire to try something different. In many of those cases, our advice was to wait.
But this conversation took a different direction. And, it eventually led to an Alternative Investment Fund (AIF).
So, what made this client different? What made me feel that he had actually earned the right to explore alternative investments?
The answer has very little to do with the ₹1.25 crore sitting in his bank account and everything to do with the financial decisions that came before it.
Let’s explore that.
Why Do Investors Start Exploring Alternative Investments?
Before discussing whether someone is actually ready for alternative investments, it’s worth understanding what usually sparks the curiosity to explore them in the first place.
As you saw in the case of our client (let’s call him Amit for convenience), the curiosity began after he sold one of his properties and had ₹1.25 crore available to invest—money he didn’t need in the short term.
Over the years, I’ve noticed that Amit’s situation isn’t unique. While every investor’s story is different, the triggers are often surprisingly similar. For some, it’s a large annual bonus. For others, it’s an inheritance or the proceeds from selling a property.
Then there’s another category of investors whose curiosity isn’t triggered by a financial windfall at all. Instead, it comes from years of disciplined investing. Their mutual funds, fixed deposits or even real estate investments have done well, and they begin asking themselves, “What’s next?”
I’ve even had clients describe their portfolios as “boring.” They’ve been investing consistently for years, everything is working as expected, and they simply want to add something different to the mix.
There’s nothing wrong with that curiosity as well.
However, alternative investments don’t become the right fit simply because someone is curious or has a large amount of money to invest. In fact, we’ve declined a few requests from clients who approached us with even more money than Amit.
So, what made Amit’s case different? Why did his curiosity lead to a meaningful conversation about alternative investments in his case, while I advice some clients to wait?
The answer lies in something far more important than the size of his cheque.
When Do Alternative Investments Become a Meaningful Conversation?
At MoneyAnna, we believe our role is to build a client’s financial life, not simply recommend investment products. That’s why we don’t begin these conversations by asking, what should we recommend when clients come with the curiosity to explore something new.
We begin with a much more fundamental question: “Is this even the right stage in the client’s financial journey?”
In my experience, alternative investments are never the starting point of an investment journey. They become a meaningful conversation only after the basics are already in place.
That means having an emergency fund for unexpected situations, adequate insurance to protect your family, a well-built core portfolio through traditional investments like mutual funds, equities and debt, and the confidence that important goals such as retirement or a child’s education are already on track.
Only after this foundation is built do we move to the next stage of thinking.
“Can the client comfortably stay invested for the next seven to eight years?”
“Is the existing portfolio already diversified?”
“Is the decision being driven by genuine portfolio construction or by curiosity, recent success stories or FOMO?”
Most importantly, “does this investment deserve a place in the portfolio?”
These questions may sound simple, but they often change the direction of the conversation. I’ve advised several clients to postpone alternative investments—not because they lacked money, but because they hadn’t yet reached the stage where such an investment genuinely added value to their overall financial plan.
Amit happened to be one of the few clients where the answers consistently pointed in the opposite direction.
By the time he came to us after selling his property, we had already spent nearly seven years building his financial foundation. His core portfolio was in place, his long-term goals weren’t dependent on this money, and the ₹1.25 crore gave him the flexibility to explore opportunities beyond his existing investments.
That’s why the conversation moved forward. Not because Amit had ₹1.25 crore. But because, over the years, he had earned the right to explore something beyond the basics.
Where Do Alternative Investments Fit in a Portfolio?
Alternative investments are often misunderstood because investors compare them with mutual funds, fixed deposits or stocks and then ask, “Which one will generate better returns?”
That’s not how I look at them.
The first question I ask is, “What role will this investment play in the client’s portfolio?”
A well-constructed portfolio is like a team where every investment has a specific responsibility. Mutual funds and equities help create long-term wealth. Debt investments bring stability and liquidity. Emergency funds protect against life’s uncertainties.
Alternative investments aren’t meant to replace any of these.
They are an additional layer that can provide access to opportunities not easily available through traditional investments. Depending on the investment, they may help improve diversification, reduce dependence on public markets or create an additional source of long-term capital appreciation.
This was exactly how we looked at Amit’s portfolio.
The AIF wasn’t expected to outperform every other investment he owned. Nor was it meant to become the largest part of his portfolio. It was introduced because it complemented what he had already built over the years.
Over the next 18 months, Amit became increasingly comfortable with that decision. In fact, when we met again, he wanted to explore another allocation towards an AIF. More importantly, as we reviewed his overall financial plan, we realised that his journey towards financial independence had accelerated. Earlier, he had planned to make work optional around the age of 53. With years of disciplined investing, complemented by the addition of the AIF, that milestone moved closer to 48.
Notice what made the difference. It wasn’t one investment in isolation. It was introducing the right investment into a portfolio that was already built on a strong financial foundation. That’s an important distinction.
When investors start expecting alternative investments to become the hero of their portfolio, they often end up allocating more than they should or expecting outcomes the investment was never designed to deliver.
Before You Explore Your Next Investment..
When people explore alternative investments, they often begin with the wrong question: “How much return can this investment generate?”
In my experience, that’s rarely the question that leads to better decisions. A more useful question is: “Why does this investment deserve a place in my portfolio?”
Sometimes the answer will be yes. Sometimes it will be not yet. Both are perfectly valid outcomes. Because good investing isn’t about saying yes to every opportunity, but rather about saying yes to the opportunities that fit your financial life.
If you’re at a stage where you’re wondering whether alternative investments are the right next step, don’t start by comparing products. Start by understanding where they fit in your portfolio.
That’s exactly what a wise financial conversation should help you discover.
Frequently asked questions (FAQ)
Alternative Investment Funds (AIFs) are generally suitable for investors who have already built a strong financial foundation. This includes having an emergency fund, adequate insurance, a diversified core portfolio and long-term financial goals that are on track. AIFs are best viewed as a complement to an existing portfolio rather than the starting point of an investment journey.
Receiving a large bonus, inheritance or proceeds from selling a property can be a trigger to explore alternative investments, but it shouldn’t be the deciding factor. Before considering them, ensure your financial foundation is already in place—such as an emergency fund, adequate insurance, a diversified core portfolio and long-term goals that are progressing well. Equally important, this should be money you can comfortably leave invested for at least 7–8 years, as many alternative investments are designed with a long-term investment horizon and may have limited liquidity.
There is no standard allocation that works for everyone. The right exposure depends on factors such as your age, proximity to retirement, income stability, risk tolerance and the size of your existing portfolio. In most cases, alternative investments should remain a thoughtfully sized allocation that complements your core portfolio rather than becoming its largest component.
In many cases, yes. Depending on your insurer and policy, you may be able to increase your sum insured at renewal, add a super top-up plan, or port to a more suitable policy. The right option depends on your age, health, and existing policy terms.
They can be, but only in the right circumstances. If your retirement corpus is already on track, your income needs are adequately planned for, and you have surplus money that can remain invested for the long term, an AIF may help improve diversification or enhance long-term portfolio outcomes. However, if you’re still building your retirement corpus or expect to need the money soon, traditional investments are often more appropriate.
