Apart from charting a career path, career change requires creation of a dedicated fund to help navigating the transition phase.
By Ankush Ahuja
In today’s highly competitive world, job change and career transitions are a reality that nobody can escape from. Constant evolution in the work environment due to the advent of automation and artificial intelligence is a key driving force for professionals to reinvent their careers to stay relevant in the job market. Thus, we see many mid-career professionals opting for a career transition, which includes taking specialised courses, to enhance their employability.
Funding a career transition
Career change needs to be planned in advance. Apart from charting a career path, this means the creation of a dedicated fund to help you navigate the transition phase, including the possibility of a study leave or lower salary while you are entering into a new job. In other words, you need to create an emergency fund which you cantap into during the change over period. This fund needs to fulfil two important criteria–safety and liquidity–while also offering good returns to build a decent corpus.
The importance of liquidity rules out certain options like PPF due to their prolonged lock-in period (15 years) despite offering the safety of guaranteed returns.
Declining returns from FDs mean that your investment may struggle to keep up with inflation. They may also carry a tax component on the interest income. Thus, they should be avoided for building an emergency fund or a transition fund. Returns-wise, gold offers modest returns over the long term, and may not be the best instrument to grow your wealth. As a mix of insurance and investment, ULIPs are usually not the best place to park your wealth as they suffer from certain inadequacies as a pure investment vehicle.
Equities and equity mutual funds provide high returns of around 15% and 11% respectively over the long termbut they are susceptible to market fluctuations. This makes them unsuitable for building a transition fund which you may need to withdraw at any time–including during a market recession.
Though cryptocurrency is a popular investment among millennials because of the extravagant returns on offer, their unregulated and highly volatile nature makes them fundamentally unsafe. While residential real estate is rather illiquid as an investment even as the returns seem to be declining due to pandemic-related and other factors.
Formal Education in Real-estate
The real-estate is one such sector which has employed millions without any formal education. The trends are changing, for anyone to make transition into the sector as a career; one would need basic skills and understanding of few key words, which are important for the sector. Apart from that the person should have go getter attitude. With the changing dynamics hold on language is welcome too. If you have these qualities you can make a kill in the sector.
How fractional ownership can help
Those with adequate funds to invest in real estate may consider the commercial real estate market through the fractional ownership route.
Fractional ownership allows individuals to invest in pre-leased and pre-vetted commercial properties in ticket sizes of Rs 25 lakh each, taking commercial realty investments within the reach of retail investors,including millennials and mid-career professionals who have built an adequate corpus.
At 8-10% rental yield and 5-10% capital gains, fractional ownership of commercial real estate is one of the most secure and high-yielding assets in the market today. The stable returns protect investors from the fluctuations associated with the share market.
Investing through fractional ownership
Let’s take an example. Let’s say you invest a sum of Rs 25 lakh through the fractional ownership route. This will give you an annual income of Rs 2 lakh (monthly income of Rs 16,666) at a conservative rental yield of 8%. This amount can help you tide over a transition by paying your child’s school fees or other expenses. With the investment appreciating by 5% annually, the value of the property will also increase simultaneously.
A key advantage of fractional ownership comes in the form of liquidity as investors can sell their assets in a very short span of time. Rigorous vetting of each asset including a focus on pre-leased properties and Grade A tenants, make this investment model a secure place to park your funds for career transition or emergency use.
If you are looking for an investment option to build a corpus to help with your career transition a few years from now, investing in fractional ownership of commercial real estate could be a good way to proceed.
The author is director- investment and partnerships at hBits
Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.