How To Improve ROI With These 5 Easy Steps
Depending on the return you are looking for, there are several ways to improve the profitability of your invoice discounting investment. In addition, you can consider several alternative investments to boost your net worth. Improving high-return short-term investments may be challenging, but you can achieve more with some creativity and setting clear objectives. For investors looking for low-risk investment alternatives, KredX’s Invoice Discounting investment can offer good returns.
Understanding Return on Investment (ROI)
Return on investment refers to the ratio of profitability versus the investment cost. Most importantly, it tells the investor if their high-return short-term investments are effective or ineffective. When the figure is low, it means the investment strategy is ineffective and should be adjusted; if it is high, the strategy is working.
You can calculate your ROI as:
ROI= net profit/cost of investment or
ROI= (Final value of investment –initial value of investment)/cost of investment.
Therefore, ROI is quite straightforward and depends on how much you will make on an investment such as Kredx’s alternative investment. Improving your ROI as a high-net-worth individual is simple, but you have to take into consideration aspects such as capital requirements, risk management, and past experiences.
What are some investment options in India that investors should consider?
Various players, such as KredX, provide several investment options in India that investors can consider. For instance, KredX’s invoice discounting investment product is one product to consider for quick returns in the near term. KredX links certified enterprises and vendors with investors that can buy their unpaid invoices. In return, investors have assured returns of up to 20% within 30-90 days. There is minimal investment risk involved, and you will decide the amount you want to invest. In addition, you can pay the invoice in full.
Another attractive investment option in India is an alternative investment. For instance, KredX offers a diverse range of alternative services for investors looking to diversify their portfolios. These are low-risk, high-return short-term investments for investors looking for steady income without worry about market instability. With this investment, you are assured of earning high returns relative to other alternative investments, such as RDs, FDs, and PPFs with fixed incomes.
What are the strategies to use to improve ROI?
Portfolio diversification
You should invest in a range of investment products such as invoice discounting investments, alternative investments, or real estate. Diversification is important because it spreads out risk and boosts your potential returns. The reason for diversification is that every asset class responds differently to market conditions. For instance, during the COVID-19 pandemic, as equity markets plunged almost 40% because of lockdowns, gold, on the other hand, soared to new heights. Consider fixed-income investments such as precious metals and blue chip investment.
Investing in the long-term
Although it is natural for investors to want to pursue high-return short-term investments, thinking long-term can boost your ROI. The reasoning behind thinking long-term is that your investment will have more time to withstand market fluctuations and profit from compound interest.
Be informed don’t overreact to market conditions
Markets tend to change fast in the investment world, so it is important to be up-to-date on the latest market trends and news. This can help make informed investment decisions. In order to avoid overreacting to market conditions, it is vital to have an Investment Policy Statement (IPS) that outlines investment objectives and timeline, risk tolerance, how to invest, and when to rebalance the investment portfolio. The IPS will help you stay within your goals, especially when markets fluctuate.
Minimise investment costs
Although investment fees are necessary, keeping them minimal to improve investment returns is vital. Management fees include all you are aware of, plus hidden fees in your investment. Every percentage point paid will affect ROI. Therefore, it is crucial to examine your investments to ascertain the amount to pay in management fees and consider investment alternatives that don’t charge a lot of fees.
Portfolio rebalancing
Rebalancing your investment portfolio is a good way of improving ROI. It will not be wise to make investments and then forget about them because you have invested for the long term. Portfolio rebalancing involves minimising risks and realigning your investment portfolio per your goals. For instance, if you invested Rs. 5,000 in alternative investment and invoice discounting investment with KredX, and after six months, the investment is worth Rs. 20,000, and returns for alternative investment are Rs. 6,500 and Rs. 3500 for invoice discounting, you can realign the investment so that you invest more on the instrument that is bringing more returns. Therefore, this will help boost your ROI.
Bottom Line
In conclusion, the main investment goal is maximising return. Therefore as an investor, there are several investment products, such as Invoice Discounting investment and alternative investment from platforms such as KredX, that you can consider. Most of these products are low-risk investments that promise high fixed-income returns. Among the most important strategies to consider to improve your ROI will be portfolio diversification, rebalancing investments, and minimising investment fees. As an investor, always avoid an all-in-one product and time your investment well to reap more returns.
If you are looking for minimal risk and high returns investment products, try KredX’s Invoice Discounting today.
