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Leasing - The Next Goldmine for Investors?

The world of investing is ever changing. Salaried Indians within the age group of 25-45 are now trying non-typical investment options which can help in maximizing their wealth. Yet, there are terrains which remain unexplored.

In this article, we will talk about how the world of business is moving towards leasing an asset, rather than owning it and how investment via leasing can be an excellent option for a retail investor.

The Asset Trend

Leasing for investors

The world is moving towards an asset trend where the end user, operator and owner of an asset are different. For example, Ola and Uber are two transport giants in India. However, neither of these companies own most of their cabs. The Ola/Uber cabs are majorly owned by a third party who leases it to the drivers for use. Here, the end user is you (the customer), the operator is the Ola/Uber driver who is the lessee and the third party is the owner, i.e. the lessor.

Let's talk about OTT (Over the top) platforms. Have you realized that the shows/movies that you watch on Netflix or any other online streaming platform is actually rented content? And ultimately, at the end of each month, you have to pay a fee to Netflix. This also eliminates your need to buy a CD/DVD from a brick and mortar store. The same goes for Spotify. Every month, the user has to pay a certain amount to consume content on the platform, which prevents them from buying tangible assets like music cassettes, DVDs etc.

Even software is rented now. Confused? Google Drive provides its own applications like 'Google Sheets/Doc/Slides' 'Google Forms' 'Google Contacts', which is an alternative to competitor products. For example, Google Sheets/Doc/Slide is a direct competition to Microsoft Office (a paid software). The data on Google Drive is stored on cloud and based on usage, you will have to pay a subscription fee. Which basically means, that now, leasing models are used on softwares, where after exceeding a certain data size limit, the user has to pay a fee.

And not just these things, when you look around you, a number of things are based on practical leasing models. Renting designer costumes, renting furniture from Furlenco, cars from companies like Zoom, Revv, laptops from RentSher, water purifiers from Drinktime and scooters from Bounce or Zyppare all examples of leasing.

You have a gist of how companies prefer to now adopt the leasing model on a larger scale. But have you thought of leasing as an investment opportunity? Let’s talk about it in detail.

Investment via leasing
The concept of leasing as an investment avenue is still raw in India. But there are platforms, such as, GRIP Invest, which are completely online and make the process much more simpler for retail investors.

These kinds of platforms act as a gateway between corporates and retail investors and through them, you can invest in assets leased to corporates and get a monthly IRR of 20+% pre-tax. For example GRIP recently collaborated with the popular furniture renting company Furlenco and e-scooter sharing app Zypp, through which investors were able to invest in furniture/e-scooters, which were leased to these companies.

Leasing for investors
The concept is quite unique because you become a partial owner of that asset and the company you lease it to pays you and the other co-investors a monthly rental amount.

What's Next?
According to the Global Leasing Report - 2020 by White Clarke Group, the global leasing industry has grown by a phenomenal 131%, in the last 9 years, whereas, the Indian leasing industry, which is relatively younger, has emerged as the fastest growing market with a growth rate of 60% between 2017 and 2018. The Indian market is estimated to hold great promise in the coming years.

A dynamic shift is taking place in the Indian financial industry, where more people are becoming aware of new investment avenues. However, to reap maximum fruit, a smart investor should clinch the existing opportunities in the market steadfastly.

Disclaimer: This is a Sponsored Post.

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